VAT on Delivery Commissions: A Plain-English Guide for UK Restaurant Owners
VAT on delivery platform commissions is one of the most misunderstood areas of UK restaurant accounting. The commission your platform charges is a service — and services are subject to VAT at the standard 20% rate. That much is straightforward. Where it gets complicated is how you reclaim that VAT when your restaurant sells both standard-rated and zero-rated food.
This guide explains the VAT treatment of delivery commissions in plain English, walks through the mixed-rate problem, and shows you how to avoid the two most common errors.
The basics: why commissions attract VAT
When Deliveroo, Uber Eats, or Just Eat charges you commission on an order, that commission is payment for a service: connecting you with customers, processing payments, and (where applicable) providing delivery.
Under UK VAT rules, this service is subject to VAT at the standard rate of 20%. The platform charges you the commission amount plus VAT on that commission.
Example:- Your agreed commission rate: 25%
- Order value: £40
- Commission: £10
- VAT on commission (20%): £2
- Total commission cost to you: £12
The mixed-rate food problem
Most UK restaurants sell a mix of:
- Standard-rated food (20% VAT): Hot meals, hot takeaway food, food heated to order, food kept hot after preparation. The detailed rules are in HMRC's VAT Notice 709/1 on catering and takeaway food.
- Zero-rated food (0% VAT): Cold takeaway food (sandwiches, salads, cold wraps), certain bakery items sold cold.
Why this matters
If 100% of your delivery sales are standard-rated (hot meals only), you can reclaim 100% of the VAT on your commissions as input tax. Simple.
But if 20% of your delivery sales are zero-rated (cold items), you can only reclaim ~80% of the commission VAT. The remaining 20% relates to zero-rated supplies and is not reclaimable.
This is the partial exemption principle — your input tax recovery is proportional to your taxable (standard-rated) supplies.
The two most common mistakes
Mistake 1: Reclaiming 100% of commission VAT on mixed-rate sales
This is the most common error. If your restaurant sells any zero-rated food through delivery platforms, coding all commission VAT as fully reclaimable input tax overclaims your VAT return.
What happens: Your VAT return shows higher input tax than you are entitled to. If HMRC cross-references this against the platform's reported data (which they can, since delivery platforms now report to HMRC under the Digital Platform Reporting Rules), the discrepancy could trigger an enquiry. The fix: Calculate the proportion of standard-rated vs. zero-rated delivery sales for each VAT period. Apply that proportion to your commission VAT recovery. If 85% of your delivery sales are standard-rated, reclaim 85% of the commission VAT.Mistake 2: Not reclaiming any commission VAT
Some restaurants — and some generalist accountants — code the entire commission as a cost with no VAT reclaim, either because they are unsure about the treatment or because the partial exemption calculation seems too complex.
What happens: You lose money. On £1,000/month of commission charges, the VAT component is £200. If your standard-rated sales proportion is 85%, you are entitled to reclaim £170/month — £2,040/year. Not reclaiming it is throwing that money away. The fix: Identify the VAT on your commission invoices (the platform's monthly or periodic invoice will show the VAT amount separately). Enter this as input tax in your accounting software, apportioned to reflect your sales split.How to calculate your commission VAT recovery
Here is the step-by-step calculation:
Step 1: Determine your delivery sales split
For the VAT period, calculate:
| Item | Amount | % of total |
|---|---|---|
| Hot food delivery sales (standard-rated) | £15,000 | 82% |
| Cold food delivery sales (zero-rated) | £3,300 | 18% |
| Total delivery sales | £18,300 | 100% |
Step 2: Calculate total commission VAT
Add up the VAT charged on commissions across all platforms for the period:
| Platform | Commission | VAT on commission |
|---|---|---|
| Deliveroo | £3,750 | £750 |
| Uber Eats | £2,800 | £560 |
| Just Eat | £2,200 | £440 |
| Total | £8,750 | £1,750 |
Step 3: Apply the apportionment
Reclaimable VAT = Total commission VAT x Standard-rated sales proportion
£1,750 x 82% = £1,435 reclaimable
The remaining £315 (18%) is irrecoverable — it relates to zero-rated supplies and stays as a cost.
Step 4: Enter in your accounting software
In your accounting software (Xero, QuickBooks, or Sage), split the commission VAT line in your journal entry:
- £1,435 coded as reclaimable input tax (T1 or equivalent VAT code)
- £315 coded as irrecoverable VAT (T0, T2, or a specific partial exemption code, depending on your software)
When the partial exemption threshold applies
HMRC has a de minimis threshold for partial exemption. If your irrecoverable input tax (the portion relating to exempt or zero-rated supplies) is below certain limits, you may be able to reclaim all of it. The thresholds have specific monetary and percentage tests — check HMRC's partial exemption guidance for the current limits, or ask your accountant to confirm whether the de minimis rule applies to your business.
Most restaurants on delivery platforms will have irrecoverable commission VAT well below the de minimis threshold. If yours qualifies, you can simplify by reclaiming 100% of the commission VAT — but you should still calculate the split to confirm, and keep the workings in case HMRC asks.
What about restaurants that only sell hot food?
If your delivery menu is 100% hot food (pizzas, curries, fried chicken, noodle dishes — all standard-rated), the mixed-rate problem does not apply. You can reclaim 100% of the VAT on your delivery commissions as input tax.
However, check your menu carefully. Items you might assume are standard-rated could be zero-rated:
- Cold bottled water is zero-rated
- Cold sandwiches and wraps are zero-rated
- Certain desserts served cold may be zero-rated
Use our VAT calculator
Our free VAT on Delivery Commissions Guide lets you enter your hot and cold food sales split and see exactly how much commission VAT you can reclaim. It handles the apportionment calculation automatically.
This guide covers VAT on delivery platform commissions for UK VAT-registered restaurants as of March 2026. VAT rules are subject to change — check the latest HMRC guidance for current rates and thresholds. This is not tax advice. For guidance on your specific VAT position, consult a qualified accountant or VAT specialist.