Is There VAT on Food? A Complete UK VAT Guide for 2026/27

Is there VAT on food? Yes, there is VAT on food, but it depends entirely on the type of food and how it is prepared.

In the UK, most everyday, essential grocery food is zero-rated (0% VAT). This means you do not pay any tax on it. However, luxury items, hot takeaway food, alcoholic drinks, and food items consumed on-premises at restaurants or cafes are subject to the standard VAT rate of 20%

In this article, we’ll simplify how VAT works on food and drinks, explain which items are taxed, and which not.

Let’s get started!

What Is VAT?

VAT is a consumption tax levied on goods and services across the UK. It is not a tax on your business earnings. Instead, it is a tax collected by businesses on behalf of the government from the end consumer.

If your business has a turnover that crosses the 2026/27 VAT registration threshold of £90,000, you are legally required to register. You are also required to charge the correct amount of tax on your sales and file regular returns to HMRC. 

The UK currently uses three main rates of VAT that can apply to what we eat and drink:

• The Standard Rate (20%): This applies to most commercial goods, luxury items, and restaurant services.
• The Reduced Rate (5%): This applies to specific goods like domestic energy, and occasionally, temporary hospitality schemes.
• The Zero Rate (0%): This means the item is technically taxable, but the rate of tax you charge your customers is precisely zero.

Understanding these foundational brackets is the first step in answering the big question: is there VAT on food?

Key Exceptions and Anomalies for VAT on Food and Drinks

• Cakes vs. Biscuits: According to UK law, Jaffa Cakes are treated as zero-rated cakes due to their substantial sponge base and the characteristic that cakes go hard when stale, whereas biscuits go soft.
• Ice Cream: Despite the general exception rule that cold food is always zero-rated. Ice cream is a specific exception and is always standard-rated for VAT.
• Nuts: Nuts that are unprocessed, unshelled or unroasted are classified as zero-rated. Same goes for roasted or salted nuts in shells. While, the shelled nuts which are roasted or salted and sold as a ready-to-eat snack are categorised as standard-rated.
• Bottled Water: Bottled water is standard-rated for VAT because it is classified as a “beverage” rather than a normal food, though exceptions apply to water bottled specifically for emergency mains supply relief.

Eating In vs Taking Away

If you operate a cafe, bakery, or sandwich shop, asking is there VAT on food becomes a daily operational question. The rules change completely based on where and how the food is consumed.

1. Eating In (On-Premises)

The moment a customer sits down at your tables, inside your shop, or in a designated communal seating area, the transaction is legally classified as catering. All eat-in food and drink is subject to 20% VAT, regardless of whether it is a hot meal or a cold ham sandwich.

2. Cold Takeaway Food

If a customer orders a cold food item to take away, it generally follows the standard grocery rules. A cold baguette, a salad box, or a plain croissant taken to go is zero-rated.

3. Hot Takeaway Food

If you heat food up so it can be eaten hot on the go, it is standard-rated at 20%. This applies to hot pies, freshly baked pizzas, toasted paninis, and burgers.

However, there is a fine line regarding ambient temperature. If you bake pasties and leave them on a shelf to cool naturally, and a customer buys one while it happens to be lukewarm, it may be zero-rated. If you keep them under a heat lamp or in a heated display case to keep them warm intentionally, you must charge the full 20% VAT.

VAT on Drinks

1. Hot Drinks: Tea, coffee, and hot chocolate are always standard-rated (20%), whether they are consumed on-site or taken away.
2. Cold Drinks:
   • Fruit juices and smoothies are always standard-rated (20%), regardless of whether they are consumed on-site or taken away.
   • Pure milk is standard-rated (20%) when consumed on-site as part of a catering service, but it is zero-rated (0%) when purchased cold to take away.
3. Alcoholic Beverages: Always standard-rated, subject to excise duties.
4. Sports Drinks: Drinks marketed for performance enhancement are standard-rated (20% VAT), just like most other soft drinks and beverages.

VAT Exempt vs. Zero-Rated

It is a common misconception that “VAT-exempt” and “Zero-rated” mean the same thing. This is because the customer pays 0% VAT in both cases. However, under UK tax law, they have completely opposite rules for businesses. Yes, especially when dealing with food.

Zero-Rated Items (0% VAT)

Zero-rated items are fully part of the UK VAT system. They are classified as taxable supplies, but the tax rate is set at 0%.

For food, this covers everyday essentials such as raw meat, fresh fish, vegetables, fruit, cereals, and milk. Because these items are technically taxable, businesses that make zero-rated supplies can register for VAT and fully reclaim the VAT they pay on business expenses (like commercial fridges, packaging, and delivery vans).

VAT-Exempt Items

VAT-exempt items are also within the scope of the VAT system, but they are non-taxable.

Unlike zero-rated food, businesses that only provide exempt supplies cannot register for VAT. Consequently, they cannot reclaim any VAT on their business purchases. It is important to note that food is never VAT-exempt in the UK. The exemption is strictly reserved for non-food sectors like finance, insurance, education, and healthcare.

(Note: Items that are completely outside the UK VAT system are classified as “Outside the Scope.” This is a separate third category reserved for non-commercial things like employee wages, statutory fees, or charity donations.)

VAT Registration for Food Businesses

In the UK, businesses must register for VAT if they achieve a turnover of £90,000 or more. This can be a major turning point for cafes and coffee shops. Crossing this threshold means businesses must add VAT to their prices, which can significantly affect profit margins.

Mandatory Registration

It is mandatory for cafes to register for VAT, if they are meeting the VAT registration threshold which applies to the taxable turnover. When registration is done, VAT must be charged to all the qualifying goods and services.

Voluntary Registration

Cafes can voluntarily register for VAT, even if the turnover falls below the threshold. If they register, cafes can reclaim VAT on their business-related purchases, which can benefit them financially.

Still, consulting professional advice from our accountants to understand VAT registration implications is highly recommended. We can provide a deep insight of how your cash flows and the overall financial health of your business can be affected.

How Does VAT Apply to Pre-Packaged vs. Loose Foods?

Generally, most food for human consumption is zero-rated for VAT in the UK, regardless of whether it is pre-packaged or loose. This includes items like fruits, vegetables, bread, milk, and uncooked meat and fish.

However, there are exceptions where standard-rated VAT (20%) applies, influenced by the type of food, its temperature, and the circumstances of sale or consumption.

Are Catering Services and Buffet Meals Subject to VAT?

Whenever food is supplied in catering services, it is always subject to the standard 20% VAT rate. This standard rate applies because catering involves a distinct service element, whether it occurs in a restaurant, via a food delivery platform, or through an event vendor.

Buffet meals are also considered a catering service so they are also subject to 20% standard VAT rate

What Are the VAT Rules for Online Food Delivery?

The VAT rules for online food delivery services depend on the type of food and how it is delivered.

Hot Takeaway Food (Standard-Rated, 20% VAT)

This includes items cooked or heated to be consumed hot, such as pizza, pasta, or burgers. All hot food deliveries are subject to the standard 20% VAT rate.

Cold Takeaway Food (Generally Zero-Rated, 0% VAT)

This includes items sold and delivered cold, such as salads, cold sandwiches, or grocery-ready meals. However, specific luxury items are always standard-rated at 20% VAT, even when delivered cold. These exceptions include:

• Confectionery, sweets, and chocolates
• Crisps and savoury snacks
• Soft drinks, fruit juices, and smoothies
• Ice cream

How Do VAT Rules Differ for Supermarkets vs. Restaurants?

Here’s how VAT rules differ between supermarkets and restaurants in the UK:

VAT on Supermarket Food UK

• Zero-rated (0% VAT): Most basic foodstuffs for human consumption are zero-rated when sold by supermarkets. This includes items like:
  • Fresh fruits and vegetables
  • Raw meat, fish, and poultry
  • Bread and bakery products (unless confectionery or consumed hot)
  • Milk and most dairy products (excluding ice cream)
  • Tea, coffee, and cocoa (for home consumption)
  • Rice, pasta, grains, and cereals (uncooked)

• Standard-rated (20% VAT): Some items are always standard-rated regardless of where they are sold, including supermarkets:
  • Alcoholic drinks
  • Confectionery (excluding cakes and some biscuits)
  • Crisps and savoury snacks
  • Ice cream and similar frozen desserts
  • Soft drinks and mineral water

Restaurants (catering services)

• Standard-rated (20% VAT): Restaurants, cafes, pubs, and other catering establishments must charge the standard rate of VAT on most food and drink they sell. This includes:
  • Food consumed on the premises: All food and drink eaten in a restaurant, cafe, or any designated area (even outdoor seating) is standard-rated. For example, a loaf of bread is zero-rated in a supermarket, but garlic bread in a restaurant is standard-rated.
  • Hot takeaway food: Food that has been heated, kept hot, or marketed as hot, and sold for takeaway, is standard-rated.
  • Catering Services: Any supply of prepared food and drink that involves a significant element of service, such as buffets, event catering, or meals delivered for immediate consumption, is considered catering and is standard-rated.
• Zero-rated (0% VAT) Exception for Takeaway: Cold takeaway food that is not eaten on the premises is generally zero-rated, unless it falls into an “excepted item” category like confectionery, soft drinks, or ice cream.

What Penalties Apply for Incorrect VAT Charging?

HMRC has the authority to charge penalties to taxpayers who fail to comply with the regulations and filing requirements of UK VAT legislation. HMRC typically applies the following penalties:

How Can Businesses Reclaim VAT on Food Purchases?

Businesses can reclaim VAT on food purchases under specific conditions, but the rules are complex and depend on who the food is for and why it was bought.

1. Food for resale: If you are a VAT-registered food business, such as a cafe or restaurant, you can reclaim the VAT on food you purchase to sell to your customers.
2. Staff subsistence: VAT can be reclaimed on meals and food purchased for employees who are working away from their usual place of work, such as on a business trip.
3. Staff entertainment: VAT is generally recoverable on food and drink provided for staff entertainment, such as an office party, as long as it’s not exclusively for directors or partners.
4. Business entertainment: The VAT on food and drink provided for non-employees, such as clients or suppliers, cannot be reclaimed. This is a specific block imposed by HMRC.
5. Mixed use: If a food purchase is for both business and personal use (e.g., a sole trader buying food for a business trip), you can only reclaim the proportion of the VAT that relates to the business use.

Are Imported Food Items Subject to VAT?

Food imported into the UK is treated the same way as domestic sales. Luxury and processed foods are subject to VAT while essential food items are mostly not liable to VAT.

Important Update: The 2026 Summer VAT Reduction

If you run a hospitality business or an attraction, you need to be aware of a temporary policy tweak active during the current 2026/27 tax year.

Under the Great British Summer Savings scheme, the government introduced a temporary 5% reduced VAT rate running from 25 June 2026 to 1 September 2026.

This temporary cut applies specifically to:

• Children’s meals served for consumption on-premises (eat-in) at restaurants, cafes, and pubs.
• Admission tickets for qualifying family attractions, such as zoos, museums, and theme parks.

To qualify for the 5% rate, the items must be explicitly marketed, priced, and presented as a children’s option, such as a meal or non-alcoholic beverage from a dedicated kids’ menu. Standard adult meals, takeaway orders, and any alcoholic drinks are completely excluded from this relief and remain at 20% VAT.

As a business owner, you are not legally required to pass this tax cut down to consumers via lower prices. You can choose to maintain your gross menu prices to help improve your profit margins over the busy summer period. Just make sure your EPOS billing systems and accounting software are updated to track this 5% rate accurately, as everything must automatically revert to the standard 20% rate at midnight on 1 September 2026.

Conclusion

VAT on food can be tricky, but now you know how it works. From zero-rated items like fruits and vegetables to standard-rated meals at restaurants, it all depends on the type of food and how it’s sold. With this knowledge, you can make smarter decisions when shopping or dining out. Whether you’re a consumer or business owner, understanding these rules helps avoid confusion at the checkout.

How CruseBurke Can Help

At CruseBurke, we help cafés, restaurants, takeaways, bakeries, food retailers and catering businesses apply the correct VAT treatment with confidence. Whether you need help with VAT registration, bookkeeping, VAT returns or a review of your current VAT position, our team provides practical advice that fits your business.

Get in touch and let’s make sure your food VAT is actually working the way it should!

Disclaimer: The information about whether “Is there VAT on food” provided in this blog includes text and graphics of a general nature. It does not intend to disregard any of the professional advice.