Is hot takeaway food always standard-rated?

Yes. Hot takeaway food is standard-rated at 20% whenever it meets any one of HMRC's five hot-food tests, such as being heated to order or kept hot after cooking. Temperature at the point of sale is what matters, not whether the customer eats it hot. A pasty sold to cool on a shelf can be zero-rated, but the same pasty kept in a hot cabinet is standard-rated.

Does the 12.5% hospitality VAT rate still apply?

No. The 12.5% rate was temporary and ended on 31 March 2022. From 1 April 2022 the standard 20% rate returned to catering and hot takeaway food. If your till or bookkeeping template still uses 12.5%, it is out of date and should be corrected.

Do I charge VAT on a cold sandwich eaten at a table?

Yes. A cold sandwich is zero-rated only as a takeaway. Once a customer eats it on the premises, or in any seating area you set aside for customers, it becomes catering and is standard-rated at 20%. This is why staff ask whether an order is to eat in or take away.

VAT for Restaurants and Takeaways

Written and reviewed by the Hospitality Accountants editorial team. Last reviewed 27 July 2026.

Few taxes catch a food business out as often as VAT. The rate you charge depends less on what you sell than on how you sell it: the temperature of the food, whether the customer eats in, and how the order is packaged. A cold sandwich taken away is zero-rated, while the same sandwich eaten at a table is standard-rated at 20%. This guide sets out how HMRC draws those lines so you can code each sale correctly.

The rules sit in HMRC VAT Notice 709/1, and they have moved in recent years through a temporary reduced rate that has now ended. Below we explain the hot-food tests, the eat-in and takeaway split, the scheme available to smaller operators, and the registration thresholds. When you would rather hand the returns over, our hospitality VAT returns service files them for you.

Hot Food and the Five Standard-Rated Tests

Hot takeaway food is standard-rated at 20%. HMRC applies five tests, and meeting any one of them makes the food hot for VAT: it is heated so it can be eaten hot, it is heated to order, it is kept hot after cooking, it is sold in packaging that retains heat, or it is advertised as hot. A rotisserie chicken kept under a heat lamp meets more than one test, so it is standard-rated even when a customer lets it cool on the way home.

Cold takeaway food is zero-rated, which is why a chilled meal deal costs the same whether or not you are registered for VAT. The catering and takeaway VAT notice works through the borderline cases, from toasted sandwiches to pastries left to cool on a shelf.

Eat-In Versus Takeaway VAT

Anything eaten on the premises is catering, and all catering is standard-rated regardless of temperature. Premises includes any area set aside for your customers to sit and eat, so tables on a forecourt or a shared food-court seating zone count. A cold salad becomes standard-rated the moment the customer chooses to eat it in that space.

This is why many counters ask whether an order is to eat in or take away: the answer changes the VAT. The current standard rate is 20%, confirmed on the gov.uk VAT rates page, and it applies to the eat-in version of a product even where the takeaway version is zero-rated.

The Temporary Hospitality Rate History

During the pandemic the government cut the VAT rate on hospitality and attractions. The rate fell to 5% from 15 July 2020 to 30 September 2021, rose to 12.5% from 1 October 2021 to 31 March 2022, and returned to the standard 20% on 1 April 2022. There is no reduced hospitality rate in force now.

We mention the history because older tills, spreadsheets and accounting templates sometimes still carry a 5% or 12.5% code. If yours does, the safe assumption today is 20% on catering and hot takeaway, and zero on qualifying cold takeaway.

The Flat Rate Scheme for Catering

Smaller businesses can use the Flat Rate Scheme, paying a fixed percentage of gross turnover instead of tracking VAT on every purchase. Since 1 April 2022 the rate is 12.5% for catering including restaurants and takeaways, 6.5% for pubs, and 10.5% for hotel and accommodation. You still charge customers the normal 20%, but you hand a flat share of your gross takings to HMRC.

The scheme trades simplicity for the loss of input VAT recovery, so it rarely suits a business planning a large fit-out with heavy reclaimable costs. Whether it pays depends on your margins and how much VAT you incur on stock and overheads.

VAT Registration and Deregistration Thresholds

You must register for VAT once taxable turnover passes £90,000 in any rolling 12-month period, a threshold that has applied since 1 April 2024. You can deregister when turnover falls below £88,000. For a busy restaurant these figures arrive quickly, so we watch the rolling total rather than the accounting year.

Registration is not only a cost. Once registered you reclaim VAT on stock, equipment and the fit-out, which can outweigh the output VAT on zero-rated cold sales. The decision is rarely one-way, and it deserves a look at your actual sales mix.