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About VAT Savings

IntuitivePOS

How to Save VAT on Cold Food

A simple storyboard guide for restaurants

1

Cold takeaway food

Usually 0% VAT Staff handing a takeaway bag to a customer

If it is taken away and eaten off the premises.

2

Food eaten in

20% VAT Customer eating a salad in a restaurant

If it is eaten in your restaurant or seating area.

3

Hot takeaway food

20% VAT Hot coffee and a toasted sandwich

Hot food and hot drinks are standard-rated.

4

Some cold items stay 20%

Still standard-rated Crisps, bottled water, chocolate and ice cream

Examples: soft drinks, bottled water, crisps, confectionery and ice cream.

5

How restaurants save money

Charge the right VAT automatically EPOS screen with Takeaway and Eat-in buttons

Use separate takeaway and eat-in buttons in your EPOS.

6

Keep good records

Protect your business Sales report with coins

Keep clear reports when you have both dine-in and takeaway sales.

Cold takeaway
food: usually 0%
Eat-in and hot
takeaway: 20%
IntuitivePOS helps apply the right VAT treatment
Same takeaway order, big VAT saving: a £50.95 takeaway order shows £8.49 VAT when everything is charged at 20%, versus £5.75 with IntuitivePOS applying 0% to cold items and splitting a £9.95 Tandoori Chicken package into hot chicken, cold salad and cold sauce, saving £2.74.

General guidance only. Check HMRC guidance for your exact VAT treatment.

Frequently Asked Questions

What happens if hot and cold food is sold together as one £10 takeaway meal?

For example, a £10 Tandoori Chicken Meal includes hot tandoori chicken, cold salad and cold sauce. If the items are genuinely separate components and can also be bought separately, HMRC normally treats this as a mixed supply. The £10 selling price should be fairly divided between the different components.

https://www.gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091

Is cold takeaway food always 0% VAT?

No. Many qualifying cold takeaway foods can be zero-rated, but some products such as confectionery, crisps, ice cream, bottled water and certain drinks remain standard-rated.

What happens if the customer eats the food inside the restaurant?

Food and drink supplied for consumption on the premises is generally standard-rated, even where the same cold food could qualify for zero-rating when taken away.

What VAT applies to hot takeaway food?

Hot takeaway food is generally standard-rated at 20% where HMRC’s hot-food conditions are met.

Can a cold sandwich be 0% VAT?

Potentially, yes. A qualifying cold sandwich sold to be taken away and eaten off the premises can normally be zero-rated.

What if we sell both eat-in and takeaway?

You need to distinguish between the two. HMRC says businesses with both types of sale need to correctly identify or fairly apportion qualifying cold-food sales between eat-in and takeaway.

How can IntuitivePOS help?

IntuitivePOS can be configured so staff select Eat In or Takeaway, allowing the EPOS to apply the VAT rules you have configured to the relevant products and keep clearer sales records.

Could this save my restaurant money?

If qualifying takeaway sales are currently being incorrectly treated as standard-rated, applying the correct VAT treatment could reduce VAT overpayments. The actual saving depends on your products and sales mix.

Do I need to keep records?

Yes. HMRC requires satisfactory evidence where businesses need to distinguish or apportion qualifying cold takeaway sales from on-premises sales.

Does IntuitivePOS decide whether my food qualifies for 0% VAT?

No. The restaurant remains responsible for applying the correct VAT treatment. IntuitivePOS can help automate the rules once they have been correctly configured.