Most food and drink sold in UK restaurants and bars carries the standard rate of VAT, while much cold takeaway food is zero-rated, which creates famous grey areas like hot versus cold and eat-in versus takeaway. The temporary reduced rate during the pandemic showed how much VAT shapes margins, and the industry continues to lobby for a permanent cut.
Businesses over the VAT threshold must register and charge it, so menu prices are usually VAT-inclusive. Always cost dishes on net price, or your GP figures will flatter you.
What we ask on the show
- Should hospitality get a permanent VAT cut?
- What's the strangest hot-versus-cold VAT rule you know?
- Do guests realise how much of their bill is VAT?