Is There VAT on Food in the UK?

This is one of the most common VAT questions I am asked and it is also one of the most misunderstood. People assume food must either always have VAT or never have VAT but the reality sits somewhere in between. Food in the UK has a unique VAT position that depends on what the food is, how it is prepared, where it is sold, and how it is intended to be consumed.

I regularly explain this to café owners, takeaway operators, retailers, event organisers, and everyday consumers who want to understand why VAT appears on some food purchases but not others. Getting this wrong can lead to pricing mistakes, underpaid VAT, or missed VAT recovery.

In this article I will explain clearly when food is subject to VAT, when it is zero rated, when it becomes standard rated, and what this means in practice for businesses and individuals. I will also share the practical guidance I give clients so you can apply the rules with confidence.

The Basic VAT Position on Food in the UK

Food has a special status under UK VAT rules.

In general terms:

Most food is zero rated for VAT

Some food is standard rated at 20 percent

The distinction depends on the nature of the food and how it is sold

Zero rated does not mean VAT exempt. Zero rated food is still within the VAT system which is an important distinction.

This approach is designed to keep essential food affordable while still taxing certain types of food consumption.

What Does Zero Rated Food Mean?

Zero rated food means:

VAT is charged at 0 percent

No VAT is added to the selling price

The sale still counts as taxable turnover

VAT on related costs can usually be reclaimed

This is why supermarkets selling most groceries do not add VAT at the till but still operate within the VAT system.

Zero rating is generous from a VAT perspective but it comes with detailed rules and exceptions.

What Types of Food Are Zero Rated?

Most basic food items are zero rated.

Examples include:

Bread

Milk

Fruit and vegetables

Meat and fish

Rice pasta and cereals

Flour sugar and cooking ingredients

These items are considered essential food and are zero rated regardless of where they are sold.

Whether you buy them in a supermarket a local shop or a market stall the VAT treatment is the same.

When Food Becomes Standard Rated

Food becomes standard rated at 20 percent when it falls outside the definition of basic food or when it is sold in a particular way.

The most common reasons food becomes standard rated are:

It is hot food sold for immediate consumption

It is food sold in a catering context

It is confectionery or similar items

It is eaten on the premises

This is where most confusion arises especially in the hospitality sector.

VAT on Hot Food

Hot food is one of the clearest triggers for VAT at 20 percent.

Food is usually standard rated if it is:

Hot at the point of sale

Kept hot deliberately

Marketed as hot food

Examples include:

Hot takeaway meals

Hot pies pasties and sausage rolls

Hot pizza

Hot fried food

The intention matters. If food is heated specifically so it can be eaten hot VAT is almost always due.

This applies whether the food is eaten in or taken away.

The Famous Hot Food Grey Areas

There are some well known grey areas where food is not actively kept hot but is still warm when sold.

In these cases HM Revenue & Customs looks at factors such as:

Whether the food is kept warm on purpose

Whether it is advertised as hot

Whether heating equipment is used

Whether the price reflects hot food

This is why similar products can be VAT free in one situation and standard rated in another.

VAT on Cold Takeaway Food

Cold takeaway food is usually zero rated.

Examples include:

Cold sandwiches

Salads

Sushi

Cold baked goods

As long as the food is not heated for consumption and is sold cold it is normally zero rated.

This is why many takeaway businesses have a mix of VAT rates across their menu.

VAT on Food Eaten In

Food eaten on the premises is almost always standard rated.

This applies to:

Restaurants

Cafés

Pubs

Seating areas provided by the seller

Once food is sold for consumption on the premises it is treated as catering and VAT is charged at 20 percent regardless of whether the food is hot or cold.

Even cold food such as sandwiches becomes standard rated when eaten in.

VAT on Food Sold in Shops and Supermarkets

Supermarkets and food retailers sell a mixture of zero rated and standard rated items.

Typically:

Basic groceries are zero rated

Hot food counters are standard rated

Confectionery is standard rated

Drinks are usually standard rated

This is why receipts often show multiple VAT rates even within a single shop.

Retailers must ensure their systems correctly apply VAT to each product.

VAT on Cakes Biscuits and Confectionery

This is another area that causes confusion.

In simple terms:

Cakes are zero rated

Biscuits are usually zero rated

Chocolate covered biscuits are standard rated

Confectionery is standard rated

The distinction can feel arbitrary but it is well established in VAT law.

Chocolate is the key trigger. Items considered confectionery attract VAT.

VAT on Drinks

Most drinks are standard rated for VAT.

Examples include:

Soft drinks

Fruit juices

Smoothies

Alcoholic drinks

The main exception is milk which is zero rated.

This means a meal deal often includes a mix of VAT treatments across its components.

VAT on Takeaways and Delivery Food

Takeaways often have the most complex VAT positions.

Typical rules are:

Hot takeaway food is standard rated

Cold takeaway food is zero rated

Delivery charges follow the VAT rate of the food

If a delivery includes both hot and cold food the VAT treatment must be split correctly.

This is an area where errors are very common particularly for growing food businesses.

VAT on Food for Businesses

Businesses often ask whether they can reclaim VAT on food purchases.

The answer depends on why the food was bought.

Food Purchased for Resale

If you are a VAT registered business buying food to sell on:

VAT on purchases is usually reclaimable

Output VAT depends on how the food is sold

This applies to retailers cafés restaurants and takeaways.

Food Purchased for Staff

Food provided to staff can have different VAT treatment.

VAT may be reclaimable where:

Food is provided as part of staff welfare

Food is required for employees working late

Food is not provided as entertainment

Each situation must be considered carefully.

Food Purchased for Clients

VAT on food purchased for entertaining clients is usually not reclaimable.

This applies even if:

The meeting is business related

The cost is wholly business motivated

VAT on client entertaining food is blocked under VAT rules.

VAT on Food at Events and Catering

Catering services are generally standard rated.

If food is provided as part of an event:

VAT is usually charged at 20 percent

This applies whether the food is hot or cold

This includes weddings conferences and parties

Even where food items might normally be zero rated the catering context overrides this.

VAT on Food Given Away for Free

Free food can still have VAT consequences.

If a business gives away food:

VAT recovery on purchases may be restricted

Output VAT may be due in some circumstances

Promotions and samples need careful handling to avoid unexpected VAT bills.

Common VAT Mistakes I See with Food

Over the years I see the same issues repeated.

The most common mistakes include:

Treating all takeaway food as zero rated

Charging VAT incorrectly on cold food

Failing to split VAT rates on mixed sales

Reclaiming VAT on client entertaining food

Poor till systems and product setup

These mistakes can build up over time and lead to assessments and penalties.

How HMRC Approaches VAT on Food

HMRC pays close attention to food businesses because VAT errors are common and can be significant.

During inspections HMRC often reviews:

Menus and pricing

Whether food is hot or cold

Seating arrangements

Till systems and VAT codes

Staff understanding of VAT rules

Consistency and clear documentation are key.

Practical Advice I Give to Clients

When advising food businesses I usually focus on simplicity and systems.

I recommend:

Clear menu classification

Correct VAT setup on tills

Regular VAT reviews

Staff training on VAT basics

Getting advice before changing menus

Small changes such as adding seating or heating food can have major VAT consequences.

So Is There VAT on Food?

Sometimes yes and sometimes no.

In summary:

Most basic food is zero rated

Hot food is usually standard rated

Food eaten in is standard rated

Drinks and confectionery are standard rated

VAT recovery depends on purpose

Food VAT is not about fairness or logic. It is about rules and definitions. Once you understand those rules you can apply them consistently and avoid problems.

If you sell food or buy it regularly for business purposes it is worth getting clarity early. VAT on food is manageable when handled correctly but expensive when assumed.