VAT on Delivery Commissions: UK Restaurant Owner's Guide

Corrected on 2026-08-10: an earlier version of this guide said that a restaurant selling zero-rated cold food could reclaim only a proportion of the VAT on its platform commissions, and cited HMRC's partial exemption guidance as authority. That was wrong, and the correction runs in your favour. Zero-rated supplies are taxable supplies taxed at 0% — they are not exempt supplies — so they do not restrict input tax recovery. The VAT on your delivery commission is reclaimable in full. Partial exemption is triggered only by making genuinely exempt supplies, which a restaurant selling food and drink does not. The worked example, the "two common mistakes" section and the de minimis section have all been rewritten against VAT Notice 700 and VAT Notice 706. If you have been restricting your commission-VAT reclaim on the strength of the earlier version, speak to your accountant about correcting prior returns.

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. What trips people up is what happens when your restaurant sells both standard-rated and zero-rated food. The short answer is that it changes how you record your sales, and changes nothing about how much commission VAT you can reclaim.

This guide explains the VAT treatment of delivery commissions in plain English, shows where the real apportionment sits, and covers the two errors that cost restaurants money.

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

That £2 VAT is input tax. If you are VAT-registered, you can reclaim it.

The mixed-rate menu: what it changes and what it does not

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.

This mix has one real consequence and one imagined one. It is worth being precise about which is which, because getting it backwards costs real money.

What it does change: the output VAT on your sales

Your delivery sales are not one number for VAT purposes. Hot food carries output VAT at 20%; cold takeaway food carries none. If you post a single gross delivery-sales figure and apply one rate to it, your output VAT is wrong — usually overstated, sometimes understated, always hard to defend in an enquiry.

This is the apportionment that genuinely applies to a mixed menu, and it happens on the sales side of the return. The VAT treatment of the delivery charge itself is a separate (though related) question.

What it does not change: your commission VAT reclaim

Zero-rated supplies are taxable supplies — taxed at 0%, but taxable. VAT Notice 706 puts it plainly: "Most taxable supplies require VAT to be charged at the standard rate, but some taxable supplies will attract VAT at the reduced or zero rate."

That matters because input tax recovery follows the right to deduct, not the rate. VAT Notice 700 states that you can normally reclaim input tax relating to "supplies you make which are liable at the standard rate, reduced rate or the zero rate."

So if your restaurant makes only standard-rated and zero-rated supplies — which describes almost every UK restaurant — 100% of your commission VAT is reclaimable input tax, whatever your hot/cold split. A cafe selling 80% cold food reclaims exactly the same proportion of commission VAT as a pizzeria selling none: all of it.

When partial exemption actually applies

Partial exemption is a real regime, but it is triggered by something a restaurant almost never does. VAT Notice 706 defines it: 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 specific category — financial services, insurance, certain land and property transactions, some health and education. Food and drink is not on that list. A restaurant selling hot meals and cold sandwiches makes two kinds of taxable supply and no exempt supplies at all, so it is not partly exempt and no restriction applies.

HMRC's partial exemption manual is consistent with this: PE12000 describes "the restriction of input tax claims to the amount related to making supplies that carry a right to deduct." Zero-rated supplies carry that right. The manual does not treat zero-rated supplies as restricting recovery, and citing it for that proposition — as this guide previously did — is a misreading.

The same goes for the de minimis rules, which are sometimes invoked here. De minimis governs exempt input tax: it lets a partly exempt business recover small amounts of exempt input tax in full. If you have no exempt supplies, you have no exempt input tax, so there is no de minimis test to apply and nothing to fall below it.

The two most common mistakes

Mistake 1: Restricting the reclaim because some of your food is zero-rated

This is the expensive one, and it is common precisely because it sounds prudent. A restaurant sees that 20% of its delivery sales are cold food, concludes that 20% of its commission VAT must be "irrecoverable", and writes it off as a cost.

What happens: You under-reclaim, permanently. On £1,000/month of commission the VAT is £200. Writing off 20% of that is £40/month — £480 a year given away for no reason. And because it looks conservative, nobody queries it. The fix: Reclaim the full commission VAT as input tax. Code the whole VAT amount as standard-rated input (T1 in Xero, or your software's equivalent). There is no split to calculate on the commission side.

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 they assume a mixed menu makes the calculation complicated.

What happens: You lose the lot. On £1,000/month of commission charges, the VAT component is £200 — £2,400 a year. The fix: Identify the VAT on your commission invoices (the platform's periodic invoice shows the VAT amount separately) and enter the full amount as input tax.

There is a third error worth naming, though it sits on the sales side: posting delivery sales as a single gross figure and applying one VAT rate to the lot. That one does need fixing, and the next section shows how.

How to handle a VAT period correctly

Here is the calculation, end to end, for a restaurant with a mixed menu.

Step 1: Split your delivery sales by rate

For the VAT period:

The £2,500 is £15,000 ÷ 6 — the VAT fraction of a VAT-inclusive standard-rated figure. The cold sales carry no output VAT, but they still belong in your turnover. This is the apportionment step that a mixed menu actually requires. Skip it and your output VAT is wrong.

Step 2: Total your commission VAT

Add up the VAT charged on commissions across all platforms for the period:

Step 3: Reclaim it — all of it

Reclaimable input tax = £1,750.

No apportionment, no irrecoverable residue. The 82/18 hot/cold split governed step 1 and has no bearing here, because both categories are taxable supplies carrying the right to deduct.

Step 4: Enter in your accounting software

In Xero, QuickBooks or Sage:

• Sales: two lines — £15,000 gross at the standard rate (£2,500 output VAT), £3,300 at zero rate (nil).
• Commission: £8,750 to your platform-commission expense account, with the full £1,750 coded as reclaimable input tax (T1 or equivalent).

No "irrecoverable VAT" code is needed on the commission, because none of it is irrecoverable.

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), step 1 collapses to a single line and everything else is the same. Your commission VAT was always fully reclaimable.

It is still worth checking your menu, because the sales split matters even where the reclaim does not:

• Cold bottled water is zero-rated
• Cold sandwiches and wraps are zero-rated
• Certain desserts served cold may be zero-rated

If even a small proportion of your delivery sales are zero-rated, your output VAT needs splitting. Your commission reclaim does not.

Use our VAT calculator

Our free VAT on Delivery Commissions Guide lets you enter your hot and cold food sales split and confirms the treatment — full recovery on the commission VAT, with the sales split shown separately. For the broader VAT picture — food VAT rates, the registration threshold, and Making Tax Digital — see our restaurant VAT guide for the delivery era.

---

This guide covers VAT on delivery platform commissions for UK VAT-registered restaurants as of August 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.

Sources

• HMRC VAT rates
• HMRC VAT guide (Notice 700) — input tax you can reclaim
• VAT Notice 706: partial exemption
• HMRC VAT Partial Exemption Guidance — PE12000
• HMRC VAT Notice 709/1 — Catering, takeaway food and VAT
• Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023