VAT on Catering: What UK Caterers Charge

Food is normally zero-rated for VAT. Catering is not. If you are VAT registered and you supply food in the course of catering, you charge the standard rate of 20% on the whole supply — including the elements that would be zero-rated if you sold them from a shop.

That single rule catches most caterers off guard at registration, because the arithmetic is brutal: a menu quoted at £48 per head becomes £48 including VAT unless you re-price, and £40 of that is yours. This guide covers where the line sits, the one significant exception, and what to do about it before you cross the threshold rather than after.

The rule, in the words of the Act

Zero-rating for food comes from Schedule 8, Group 1 of the Value Added Tax Act 1994, which applies across the UK. The exception is in the opening words of the Group itself:

"The supply of anything comprised in the general items set out below, except— (a) a supply in the course of catering..."

General Item 1 is "Food of a kind used for human consumption." So food is zero-rated — unless the supply is in the course of catering, in which case the exception bites and the standard rate applies. The standard rate of VAT is 20% and applies to most goods and services.

Note (3) to the Group then defines the phrase:

"A supply of anything in the course of catering includes— (a) any supply of it for consumption on the premises on which it is supplied; and (b) any supply of hot food for consumption off those premises"

Note the word includes. Note (3) extends the meaning of catering to cover those two cases; it does not exhaust it. The ordinary meaning of catering still applies on top, which is why an off-site event caterer serving cold food is caught even though neither limb of Note (3) obviously describes them — HMRC's own examples confirm this; see below.

What HMRC treats as catering

HMRC's interpretation is set out in VAT Notice 709/1. The Notice is guidance rather than law, but it is how the rule is applied in practice, and it is more specific than the Act about event work. It puts it this way:

"Catering in its ordinary meaning includes the supply of prepared food and drink. It is characterised by a supply involving a significant element of service."

That verb again: includes. The Notice is describing catering, not fencing it in.

And its examples of supplies in the course of catering include:

"third party supplies of catering for events and functions, such as wedding receptions, parties or conferences."

That is event catering described precisely. If you are supplying food and a service element to a wedding, a party or a conference, you are making a supply of catering, and it is standard-rated.

The exception worth knowing

There is one distinction that genuinely changes the answer, and it is the reason "delivered food" is not a simple category. The Notice puts it this way:

"If you supply food that your customers must prepare themselves before it can be consumed, this is not a supply in the course of catering. This will apply whether the food is delivered to, or collected by, your customers."

But the very next passage closes the obvious loophole:

"if you are supplying the food or drink under a contract, for example to cater for an event, you are making a supply of catering and all your supplies will be standard-rated."

So the test is not delivery, and it is not temperature. It is whether the customer has to finish the job themselves, and whether you are supplying under a contract to cater an event.

Two examples that sit either side of the line:

• Cold ingredients delivered for the client to assemble — a box of components a client will plate and dress themselves, with no service element and no event contract. Potentially not catering.
• The same cold food, delivered to a wedding under a catering contract — catering, standard-rated in full, even though nothing is hot and nobody stays to serve.

If you operate anywhere near that boundary, get your specific arrangement confirmed rather than reasoning from the examples. The consequences of getting it wrong run backwards through every invoice you have raised.

Hot food is standard-rated whoever supplies it

Separately from the catering question, hot takeaway food is standard-rated. The Notice sets out that a sale is standard-rated if the food is hot when provided and one or more of the following applies — it has:

"been heated for the purposes of enabling it to be consumed hot", "been heated to order", "been kept hot after being heated", "provided to a customer in packaging that retains heat...or in any other packaging that is specifically designed for hot food", "advertised or marketed in a way that indicates that it's supplied hot"

For a market-stall or street-food caterer this is the operative rule most days, and it is why hot food from a stall is standard-rated whether or not a catering contract exists.

When you have to register

Registration is mandatory when either of these is true:

• "your total taxable turnover for the last 12 months goes over £90,000"
• "you expect your taxable turnover to go over £90,000 in the next 30 days"

The first is a rolling 12 months, not a financial year. That matters for caterers more than for most businesses, because catering turnover is seasonal — a strong summer and a busy December can take a rolling twelve-month total over the threshold in a month where the business does not feel busy at all. Check the rolling figure monthly, not annually.

You can also register voluntarily below the threshold. For a caterer this is usually a worse deal than it is for other trades: your output is standard-rated, most of your ingredient purchases are zero-rated food, so there is little input VAT to reclaim against the 20% you now have to charge. The exception is a business with heavy standard-rated inputs — equipment, a vehicle, kitchen hire, packaging — where the reclaim can outweigh it. Model it before deciding.

What registration does to a per-head price

This is the part to work out in advance. Suppose your menu is £48 per head and you have 40 covers.

Before registration:

• Revenue: 40 × £48 = £1,920
• All yours (before costs)

After registration, price unchanged:

• The £48 is now VAT-inclusive
• VAT element: £48 ÷ 6 = £8.00 per head → £320
• Net revenue: £1,600
• You have lost £320 on the same booking

After registration, price adjusted to hold net revenue:

• New price: £48 × 1.2 = £57.60 per head
• Client pays £2,304 instead of £1,920 — a 20% increase

Neither option is comfortable. Corporate and venue clients are usually VAT registered themselves and reclaim it, so a 20% increase is genuinely neutral to them. Private clients — weddings, parties, private dining — cannot reclaim, so for them the increase is real money, and that is where the pressure to absorb it comes from.

The practical answer for most small caterers is a split: hold private-client pricing closer to where it was and absorb part of the VAT, and pass it through in full on corporate work. That is a margin decision, and it needs to be made against a costed menu rather than a guess. Our guide to menu costing for UK caterers covers building the sell price, and the catering cost per head calculator lets you run both versions before you commit.

Practical points for a small catering business

• Quote clearly. State whether your per-head price includes or excludes VAT, on every quote. Ambiguity here becomes an argument at invoice stage. See our guide to quoting for catering events.
• Show VAT on the invoice. A VAT invoice needs your registration number, the VAT rate applied and the VAT amount. Our catering invoice template guide covers the required fields.
• Watch the rolling total in your quiet months. Registration is triggered by the trailing twelve months, so it can arrive in February on the back of the previous summer.
• Deposits carry VAT. A deposit taken after registration is a payment for a standard-rated supply.
• Do not assume every supply you make is catering. If you also sell anything that genuinely is not — packaged goods a customer takes away and prepares themselves — the treatment differs, and it is worth confirming rather than defaulting to 20% on everything.

VAT sits alongside the other running costs that shape what a catering business actually earns. Our guide to catering profit margins puts it in context with labour, travel and overheads.

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This guide is general information about VAT on catering supplies in the UK and is not tax advice. VAT treatment turns on the specific facts of each supply, and the boundary between catering and non-catering supplies is genuinely fact-sensitive. Confirm your position with your accountant or with HMRC before relying on it.

Sources

• Value Added Tax Act 1994, Schedule 8 (zero-rating), Group 1 — legislation.gov.uk
• Catering, takeaway food (VAT Notice 709/1) — GOV.UK
• VAT rates — GOV.UK
• VAT registration: when to register — GOV.UK