Restaurant VAT in the UK Delivery Era: Guide for Operators
VAT is one of the more complex areas of UK restaurant finance, and delivery platforms make it more complex still. You are now managing output VAT on food sales across multiple channels, input VAT recovery on platform commissions, the registration threshold, and digital record-keeping requirements under Making Tax Digital.
This guide covers the full VAT picture for UK restaurants on delivery platforms — in plain English, with the most common mistakes and how to avoid them.
The basics: what attracts VAT on restaurant food
UK VAT on food is not a uniform rate. The rate depends on whether the food is hot or cold, whether it is prepared to order, and where it is consumed. For delivery platform restaurants, the relevant rules are:
Hot food: standard-rated at 20%. Food served hot, food cooked and kept warm, food heated to order — all standard-rated. Most restaurant delivery menu items fall here: hot meals, hot dishes, food served immediately after cooking. Cold food: zero-rated (in most cases). Cold takeaway food is zero-rated under Group 1, Schedule 8 of the VAT Act 1994. This includes cold sandwiches, cold salads, cold desserts, cold drinks (other than alcoholic drinks and most hot drinks), and many cold snacks. Zero-rated means taxable at 0% — not exempt. The critical distinction: zero-rated vs. exempt. Zero-rated supplies are taxable supplies (just at a 0% rate). This matters because it drives input VAT recovery: you can recover input VAT on costs that relate to zero-rated supplies, exactly as you can on standard-rated ones. Exempt supplies are different — input VAT relating to exempt supplies is generally not recoverable, and it is exempt supplies alone that bring a business into the partial exemption regime. Most UK restaurants make no exempt supplies at all, so partial exemption simply does not engage.For a restaurant that delivers exclusively hot food, the VAT position is straightforward: all delivery revenue is standard-rated, and all related input VAT (on commissions, supplies, and overheads) is recoverable. For a mixed-menu restaurant, the input side is just as straightforward — everything is still recoverable — but the output side needs the sales split by rate.
VAT on platform commission
When Deliveroo, Uber Eats, or Just Eat charges you commission, that commission is a standard-rated service fee at 20% — regardless of what food you sell. The platform is supplying you a service (customer acquisition, payment processing, delivery fulfilment) and that service is standard-rated.
For a VAT-registered restaurant, the VAT on commission is input tax, and you can reclaim it in full on your VAT return — whatever your hot/cold sales mix.
That surprises people, so it is worth stating the basis. VAT Notice 700 allows recovery of input tax relating to "supplies you make which are liable at the standard rate, reduced rate or the zero rate." Zero-rated food is a taxable supply at 0%, not an exempt supply, so it carries the right to deduct just as hot food does. Recovery is restricted only by exempt supplies, which a restaurant selling food and drink does not make.
Hot food only: reclaim 100% of the commission VAT. Mixed hot and cold menu: still reclaim 100% of the commission VAT. Example: Weekly commission total £900, VAT on commission £180. Standard-rated sales = 85% of the delivery total.- Reclaimable input VAT: £180 — the whole amount
- Irrecoverable: £0
The VAT registration threshold
VAT registration is mandatory once your taxable turnover exceeds £90,000 in a rolling 12-month period. For restaurants, "taxable turnover" includes both standard-rated and zero-rated supplies — zero-rated sales count toward the threshold even though no output VAT is charged on them.
A restaurant doing significant cold-food delivery may be closer to the threshold than it appears. A cafe doing £60,000 in cold food (zero-rated) and £35,000 in hot food (standard-rated) has taxable turnover of £95,000 and must register, even though the effective output VAT rate on total turnover is well below 20%.
Once registered, VAT registration carries benefits alongside the compliance obligations: you recover input VAT on costs, including platform commission. A restaurant running significant delivery volume will typically find that commission VAT recovery partially offsets the administrative burden of registration.
Partial exemption: why it almost certainly does not apply to you
Partial exemption arises when a business makes both taxable and exempt supplies. VAT Notice 706 is explicit: a business is partly exempt if it "makes, or intends to make, both taxable and exempt supplies and incurs tax on costs which relate to both."
Exempt supplies are a defined category — financial services, insurance, certain land and property, some health and education. Food and drink is not in it. A restaurant with a mixed hot/cold menu makes two kinds of taxable supply and no exempt supplies, so it is not partly exempt and nothing about its input tax recovery is restricted.
There is no intermediate doctrine here. A mixed standard-rated/zero-rated menu does not create a lesser, partial version of the regime — it creates no restriction at all. HMRC's partial exemption manual describes "the restriction of input tax claims to the amount related to making supplies that carry a right to deduct," and zero-rated supplies carry that right.
The de minimis rules follow the same logic. They exist to let a partly exempt business recover small amounts of exempt input tax in full. With no exempt supplies you have no exempt input tax, so there is no de minimis test to run and nothing that could fail it.
The practical upshot: reclaim your commission VAT in full, and put the effort into apportioning your sales by rate instead. That is where a mixed menu actually creates work.
HMRC Digital Platform Reporting: the connection to VAT
Since January 2024, Deliveroo, Uber Eats, and Just Eat each submit an annual report to HMRC under the Digital Platform Reporting Rules (SI 2023/817) — due by 31 January following each calendar year, with your gross revenue broken down by calendar quarter. The figures reported are your gross food sales on the platform — not the net payout, not the platform's fees, just your gross revenue.
This creates a data consistency requirement: your VAT return (which reports your output VAT on taxable supplies) should be consistent with the gross revenue HMRC receives from the platforms. If you book net deposits as revenue, your declared turnover will be lower than the gross figures HMRC holds from the annual reports, and the mismatch will appear on your VAT return.
The fix is correct payout reconciliation: record gross sales as revenue, commission and fees as expenses, and VAT on commission as reclaimable input tax — consistently, every week. Our HMRC Digital Platform Reporting guide covers what each platform reports and the four most common discrepancy patterns.
Making Tax Digital for VAT
VAT-registered restaurants are within the Making Tax Digital for VAT (MTD for VAT) regime. The requirements are:
- Digital record-keeping using HMRC-compatible software (Xero, QuickBooks, Sage, etc.)
- Digital submission of VAT returns via API — manual re-entry into the HMRC portal is not permitted
- Digital links between record-keeping and submission steps — no copying figures manually between systems
For more on MTD requirements, including MTD for Income Tax from April 2026, see our Making Tax Digital guide for UK restaurants.
The four most common restaurant delivery VAT mistakes
1. Booking the net payout as revenue. This understates output VAT (and revenue) by the commission and refund amounts. Your declared VAT position will be inconsistent with what HMRC receives from the platform. 2. Not reclaiming commission VAT. Many restaurants — particularly those with generalist accountants unfamiliar with delivery platforms — do not claim back the VAT on commission at all. At 20% of commission costs, this is a significant and unnecessary loss. 3. Applying one commission VAT recovery rate to all platforms regardless of sales mix. Each platform may have a slightly different proportion of hot/cold sales if your menus vary. Applying a blanket recovery rate across all platforms is a simplification; whether it is a material error depends on your menu mix. 4. Treating zero-rated food as exempt. Zero-rated food is taxable at 0%, not exempt. Treating it as exempt — or assuming it means you cannot reclaim commission VAT — is a common misconception that costs money.Key takeaways
- Hot food = standard-rated (20%); cold food = zero-rated (0%) — most restaurant delivery menus contain both, creating a mixed-rate VAT position.
- Platform commission is always standard-rated — and the VAT on it is recoverable input tax in full, whatever your hot/cold mix. Zero-rated sales are taxable supplies, so they do not restrict recovery; partial exemption needs exempt supplies, which restaurants do not make.
- Zero-rated sales count toward the VAT registration threshold — a cafe or cold-food operator may be within scope without high output VAT.
- HMRC receives an annual report from each platform broken down by calendar quarter — your VAT return must be consistent with that data, which means gross-revenue bookkeeping, not net-deposit bookkeeping.
- MTD for VAT requires digital records and digital submission — net-deposit entries in Xero are technically compliant with "digital" but not with "accurate."
This guide covers VAT for UK restaurants on delivery platforms and is for general guidance only. It is not tax advice. VAT rules and rates are subject to change — check HMRC's current guidance and consult a qualified accountant for your specific position.
Sources
- HMRC — Catering, takeaway food and VAT (Notice 709/1)
- HMRC VAT rates
- HMRC VAT guide (Notice 700) — input tax you can reclaim
- VAT Notice 706: partial exemption
- HMRC VAT Partial Exemption Guidance — PE12000
- Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023
- HMRC — When to register for VAT