Is There VAT on Food? What You Pay From Breakfast to Dinner
Most food in the UK carries no VAT, because HMRC zero-rates it. You pay 20% on hot takeaways, meals you eat in, and treats like crisps, sweets and ice cream. Most drinks carry 20% too.
The tricky part is knowing which is which. A box of tea bags has no VAT. A cup of tea from a kiosk does. A plain flapjack has none. A cereal bar does.
The easiest way to understand VAT on food in the UK is to follow a normal day of eating. That’s what this guide does. If you sell food, skip to the business section further down.
Is There VAT on Food in the UK? The Rule in One Minute
UK VAT on food follows three simple tests. HMRC looks at:
The product. Basic food is zero-rated. Some products are always 20%, wherever they’re sold. HMRC calls these “excepted items”.
The temperature. Food sold hot to take away is usually 20%.
The place. Food eaten where the seller provides seating is 20%. HMRC treats this as catering.
Pass all three, and the food is 0%. Fail one, and it’s usually 20%.
So does food have VAT? Mostly no. Food with VAT is the exception, not the rule.
The law on value added tax on food sits in Schedule 8, Group 1 of the VAT Act 1994. HMRC explains the rules on VAT on foodstuffs in plainer terms in VAT Notice 701/14.
Is Food VAT Exempt or Zero-Rated?
People often ask, “Is food VAT exempt?” It isn’t. It’s zero-rated, and that’s a different thing.
Zero-rated food is still taxable, just at 0%. A shop selling it can claim back the VAT it pays on fridges, rent and equipment. An exempt business can’t claim anything back. For shoppers there’s no difference. For a food business, it’s worth a lot of money.
Why does the UK zero-rate food at all? It keeps the weekly shop affordable. The poorest fifth of households spent about £330 a week on food in 2021 to 2022. 20% VAT would cost them around £3,500 a year.
A Day of Eating: Where VAT Shows Up
Most people never think about the VAT in food prices. Here’s where it hides in an ordinary day.
Breakfast at Home
Your cereal, milk and bread are zero-rated. So are eggs, butter, jam and honey.
Tea bags, ground coffee, instant coffee and coffee granules are zero-rated too. So are coffee pods for your machine at home.
The surprise is orange juice. Fruit juice counts as a drink, not a food, so it carries 20% VAT. Squash and smoothies do as well.
Coffee on the Way to Work
Grab a cappuccino from a café and you pay 20%. That’s the VAT coffee shops add to every hot drink. It applies whether you sit down or walk off with your cup.
On a £3.30 cappuccino, 55p is VAT.
Lunch and the Meal Deal
A cold sandwich from a shop is zero-rated if you take it away. Eat it at the shop’s own tables and it’s 20%. On a £4.50 sandwich, that’s 75p of VAT.
Most people buy a meal deal, which mixes rates in one price.
Say your meal deal is £5. On their own, the sandwich costs £3.50, the crisps £1.20 and the drink £1.80. The crisps and drink are about 46% of that total. So about £2.31 of your £5 is standard-rated, which means roughly 38p of VAT.
The Afternoon Snack: VAT on Biscuits, Cakes, Chocolate and Crisps
This is where the rules get fussy.
Is there VAT on biscuits? Plain biscuits are zero-rated. Chocolate chip cookies are too, because the chips sit inside the dough. A biscuit with chocolate on the outside is 20%. Bourbons stay zero-rated, because the chocolate is only in the middle.
VAT on cakes is simple: there isn’t any. Every kind of cake is zero-rated, even a chocolate fudge cake. That includes Jaffa Cakes, which a VAT tribunal ruled were cakes back in 1991.
Bars. A flapjack counts as a cake, so it’s zero-rated. A cereal bar counts as confectionery, so it’s 20%.
VAT on chocolate is 20% for bars, sweets and chocolate-covered biscuits. Chocolate chips and spread for baking are zero-rated.
VAT on crisps is 20% for potato crisps and shelled roasted nuts. Tortilla chips, Twiglets and pistachios in their shells are zero-rated.
Dinner, In or Out
Cooking at home is mostly zero-rated. Fresh meat, fish, veg, pasta, rice, sauces and frozen ready meals carry no VAT.
Eating out costs 20% on everything. Even a plain salad is standard-rated once a restaurant serves it.
A takeaway is 20% if it’s hot. That covers pizza, curry, fish and chips, burgers and kebabs.
Delivery follows the same rule. Hot food brought to your door is 20%. On an £18 pizza, £3 is VAT.
Dessert
Ice cream, sorbet and ice lollies are 20%. A slice of trifle, cheesecake or apple pie from the shop is zero-rated. Anything made to be eaten frozen is taxed. Anything you thaw first usually isn’t.
Is There VAT on Coffee and Tea?
Coffee VAT depends entirely on how you buy it. Here’s how it works for tea and coffee in every form.
Is Coffee Vatable When You Buy It for Home?
No. Coffee you make yourself is zero-rated. That covers:
Coffee beans and ground coffee
Instant coffee and coffee granules
Coffee pods and capsules, including Nespresso coffee pods
Tea bags, loose tea and herbal tea
So is there VAT on coffee beans? No. Is there VAT on instant coffee in the UK? No. Is there VAT on coffee from a supermarket? Also no. Whether you buy coffee in supermarkets, online or from a corner shop, it stays at 0%. The same goes for VAT on tea bags.
Is There VAT on Coffee in a Café?
Yes. Every hot drink a café makes is 20%. That’s true for a latte from Costa, a flat white from Starbucks or a tea from a station kiosk. It doesn’t matter if you drink it there or take it away.
So when people ask, “Is there VAT on coffee?”, the honest answer is: only when someone makes it for you hot.
Is There VAT on Iced Coffee?
Not always. A cold iced coffee sold to take away can be zero-rated, because it isn’t hot. Drink it at a café table, though, and 20% applies.
Is There VAT on Milk?
No. Milk VAT is one of the simplest rules. Milk is zero-rated, including flavoured milk and milkshakes sold to take away. Plain soya, rice and coconut milk are zero-rated too.
So is milk vatable? Only when you drink it on a café’s premises. It then becomes part of catering, so VAT on milk applies at 20%.
VAT on Drinks: Soft Drinks, Bottled Water and Alcohol
VAT on food and drink splits sharply here. Most food is 0%. Most drinks are 20%.
VAT on soft drinks is 20%. That covers fizzy drinks, squash, fruit juice, smoothies and sports drinks.
Is there VAT on bottled water? Yes. VAT on bottled water is 20%, still or sparkling. So bottled water is vatable, but tap water in a restaurant is free.
VAT on alcohol is 20% too. Is there VAT on alcohol in shops as well as pubs? Yes, everywhere. VAT for beer, wine and spirits is the same. Even alcohol-free beer is 20%.
Is There VAT on Supermarket Food?
Not much. VAT on supermarket food UK shoppers buy each week is mostly 0%. Fresh food, bread, milk, frozen meals and store cupboard basics are all zero-rated.
VAT shows up on your receipt in four places:
Snacks: crisps, chocolate, sweets and ice cream
Drinks: soft drinks, juice, bottled water and alcohol
Hot food counters: a rotisserie chicken kept warm is 20%
Household items: is there VAT on toilet rolls? Yes, 20%, along with cleaning products and toiletries
VAT Exemption List for UK Food: What’s 0% and What’s 20%
Many people search for a VAT exemption list UK food shops follow. Technically, these are VAT zero-rated products, not exempt ones. Here’s the quick list.
Usually 0% | Usually 20% |
|---|---|
Bread, cereal, pasta, rice | Fruit juice, squash, smoothies |
Milk and milkshakes to take away | Fizzy drinks and bottled water |
Tea bags, coffee beans, instant coffee | Hot drinks from a café |
Eggs, cheese, butter, honey | Beer, wine, spirits |
Fresh meat, fish, fruit, veg | Crisps and shelled roasted nuts |
Cakes, including chocolate cake | Chocolate bars and sweets |
Plain biscuits and Bourbons | Chocolate-covered biscuits |
Flapjacks | Cereal bars |
Frozen and chilled ready meals | Ice cream and lollies |
Cold takeaway sandwiches | Hot takeaways and deliveries |
Sugar, salt, flour, cooking oil | Vitamin and protein supplements |
Tortilla chips and Twiglets | Sports drinks |
Is There VAT on Takeaway Food?
Yes, if it’s hot. No, if it’s cold, with a few exceptions.
Takeaway VAT catches out a lot of people. Cold food you take away VAT free includes sandwiches, salads and cold pastries. VAT on takeaway food that’s hot is always 20%.
So do you pay VAT on takeaway food? Only when it’s hot, or when it’s an item that’s always 20%, like crisps or a canned drink. When there’s VAT, take away food prices already include it. You won’t see it added at the till.
How HMRC Decides on VAT on Hot Food
The VAT takeaway shops charge depends on HMRC’s hot food test. First, the food must be warmer than the air around it. If it’s cold, it isn’t hot food.
If it is warm, VAT on hot food applies when any one of these is true:
The seller heated it so you could eat it hot.
The seller heated it because you asked.
The seller kept it warm, for example in a hot cabinet.
It comes in packaging that holds heat, like a foil bag.
The seller advertises it as hot.
VAT Notice 709/1 gives real examples of takeaway food VAT.
A cooked chicken kept in a heated cabinet is 20%. The same chicken, cooled and sold cold the next day, is zero-rated.
A fresh loaf that’s still warm is zero-rated. The bakery didn’t heat it for you to eat hot. It just hasn’t cooled down yet.
That’s the VAT of food sold warm: the seller’s purpose matters more than the temperature.
Is There VAT on Restaurant Food?
Yes. Restaurant VAT is the simplest rule of all. Every meal you eat in carries 20%.
Do restaurants charge VAT on cold food too? Yes. A cold sandwich, a slice of cake or a glass of milk all become 20% at a restaurant table. HMRC treats them as catering.
That’s the VAT restaurant food carries on every bill. Is there VAT on food in restaurants when the same item is zero-rated in a shop? Yes. The service changes the rate, not the food itself.
The VAT on restaurant food UK diners pay is the same in every country of the UK. VAT on restaurant food is 20% in a pub, café, canteen or hotel dining room.
VAT on Food in Restaurants: UK Places Where the Rules Change
Where you eat can change the VAT, even on the same product.
Vending machines. A machine in a works canteen counts as catering, so it’s 20%. A machine in a corridor follows normal product rules.
Train stations and airports. Waiting seats for passengers don’t count as a café’s premises. A cold sandwich eaten there stays zero-rated.
Football grounds and concerts. A kiosk in a venue you pay to enter counts as premises, along with nearby seating. Food eaten there is 20%.
Schools, universities and hospitals. Catering for students is usually exempt. So are hospital meals for patients. Food sold to staff and visitors is taxed as normal.
Hotels. A packed lunch charged separately and eaten off site can be zero-rated. A packed lunch included in your room price is standard-rated.
Service Charges and Tips
An added service charge carries 20% VAT. A tip a customer chooses to leave, on top of the bill, carries none.
Gifts, Hampers and Mixed Packs
Food gifts follow their own rules, and most guides skip them.
Coffee with a free mug. The mug has its own use, so the pack is a mixed supply. The coffee is 0% and the mug is 20%.
Christmas hampers. These mix zero-rated food, standard-rated wine and chocolates, and a basket. The seller splits the price and charges VAT on the standard-rated parts.
The small extras rule. A pack can be all zero-rated if the extra isn’t priced separately, costs no more than £1, and is no more than 20% of the total cost. A plastic spoon with a yoghurt is the classic example.
Biscuit tins. A mixed tin stays zero-rated if chocolate biscuits are no more than 15% of its weight.
Bombay mix and trail mix. These stay zero-rated if items like chocolate pieces or roasted nuts are no more than 25% of the weight.
The Oddest Cases on HMRC’s List
A few rulings show how precise the law can be.
Gingerbread men are zero-rated, unless decorated with chocolate. A couple of chocolate dots for eyes is allowed.
Marshmallow teacakes count as cakes, so they’re zero-rated.
Ginger in syrup is zero-rated. Crystallised or chocolate-coated ginger is 20%.
Gluten-free cakes are zero-rated. Gluten-free chocolate biscuits are 20%.
Sports drinks have been 20% since 1 October 2012.
Prepared foodstuffs such as chilled ready meals are zero-rated, as long as you heat them at home.
VAT for Restaurants, Cafés and Food Sellers
If you run a café, bakery, takeaway, food van or catering business, the VAT for food UK sellers charge comes from the rules above. Our hospitality and retail accountants work with food businesses every day. Here’s what else to watch.
Registering for VAT
You must register once your taxable sales pass £90,000 in any rolling 12 months.
Zero-rated sales count towards that figure. A greengrocer selling only fresh produce still has to register after £90,000. If almost all your sales are zero-rated, you can ask HMRC for an exception from registration.
Close to the line? Our guide on whether to register before you hit £90,000 walks you through the choice. You can also register for VAT on GOV.UK.
Pricing Your Menu
To find the VAT inside a 20% price, divide it by six. A £9 burger includes £1.50 of VAT. Your real takings are £7.50.
Build this into your prices from the start. Many new owners price like a shop, then lose a sixth of their margin.
Food You Give Away
Staff meals given free to your team carry no VAT.
Your own family’s meals aren’t catering. But you must account for VAT on standard-rated stock you take, like wine or crisps.
Free meals for friends or clients count as business entertainment. You can’t reclaim the VAT.
Free mints with the bill are fine. HMRC treats them as part of the paid meal.
A Five Point Checklist
Code every product on your till as 0% or 20%.
Ask “eat in or take away?” for every cold item.
Check how you keep food warm before charging 0%.
Check new products against HMRC’s list before launch.
Keep VAT receipts for everything you buy.
Good records make all five easier. Our bookkeeping team can keep your sales and receipts in order, so your VAT figures always match your till.
Has the VAT Rate on Food Ever Changed?
Basic food has been zero-rated since VAT began in 1973. The standard rate has been 20% since January 2011.
Hospitality had a temporary cut during the pandemic. Restaurant meals and hot takeaways dropped to 5% from July 2020, then 12.5% from October 2021. The normal 20% rate returned on 1 April 2022.
Frequently Asked Question
Is VAT charged on food in the UK?
Mostly no. Is there VAT on food UK shoppers buy every week? Very little. Basic food is zero-rated. VAT is charged on hot takeaways, meals eaten in, sweets, crisps, ice cream and most drinks.
Do you pay VAT on food deliveries?
It depends on what’s delivered. A hot takeaway is 20%. A supermarket grocery order is mostly zero-rated. You’ll only pay VAT on standard-rated items in it, like wine or crisps.
Is there VAT on crisps?
Yes. Potato crisps are 20%. Tortilla chips, Twiglets and vegetable crisps made from beetroot or carrot are zero-rated. Popcorn kernels are zero-rated, but bagged savoury popcorn is 20%.
Is there VAT on chocolate?
Yes, on most chocolate. Bars, sweets and chocolate-covered biscuits are 20%. Chocolate cakes are zero-rated. Chocolate sold for baking, like chips or spread, is zero-rated too.
Is there VAT on sugar?
No. Sugar is zero-rated as a cooking ingredient. So are honey, sweeteners, salt and flour. Sweets made from sugar are a different matter and carry 20%.
Is there VAT on tea bags?
No. Tea bags, loose tea and herbal tea are zero-rated. A hot cup of tea from a café is 20%, because hot drinks are standard-rated when a seller makes them.
Is there VAT on takeaway coffee?
Yes. A hot coffee to take away is 20%, the same as drinking it in. A cold iced coffee to take away can be zero-rated. Coffee bought to make at home is always zero-rated.
Is there VAT on coffee pods?
No. Coffee pods and capsules, including Nespresso coffee, are zero-rated. They’re simply coffee in a different pack. VAT only applies when a café makes the coffee and serves it hot.
Is there VAT on Costa and Starbucks coffee?
Yes. Hot coffee from Costa, Starbucks or any café is 20%. Their bags of beans and jars of instant coffee sold in shops are zero-rated, like any other coffee.
Do I charge VAT on food if I’m not VAT registered?
No. If your business isn’t registered, you don’t charge VAT at all. You must register once taxable sales pass £90,000 in a rolling 12 months, and zero-rated sales count.
Need a Hand With VAT on Food?
VAT on food is full of small rules that add up. Get one wrong across a year of sales and the bill can hurt.
We can check your prices, till codes and rates before HMRC does. Our VAT returns service covers registration, quarterly returns and Making Tax Digital. For trickier questions, such as new products or mixed supplies, our taxation services team can give clear advice.
Contact us for a friendly chat about your business.
