Quick Summary
- Hot takeaway food is standard-rated for VAT at 20%; most cold takeaway food is zero-rated.
- Everything eaten on the premises is standard-rated.
- HMRC pays close attention to cash-heavy businesses — your till and EPOS records must be complete.
- Delivery app sales must be declared at the full price, with platform commission claimed as an expense.
- Since October 2024, all tips must be passed to staff in full under a written policy.
Glasgow's takeaways, restaurants and cafés deal with some of the trickiest tax rules in any sector: complicated VAT on food, lots of cash, staff on variable hours, and delivery app income. This guide covers the key areas every hospitality owner should get right.
VAT on food: hot, cold, eat-in and takeaway
Food VAT is one of the most common areas where takeaways go wrong:
| Sale | VAT rate |
|---|---|
| Anything eaten on your premises (food and drink) | 20% |
| Hot takeaway or delivered food (pizza, kebabs, fish and chips, curries) | 20% |
| Cold takeaway food (most sandwiches, salads, cold rolls) | 0% |
| Soft drinks, confectionery, crisps and alcohol | 20% — even as takeaway |
"Hot" means food deliberately heated to be eaten hot, or kept hot after cooking. Your EPOS system should be set up to apply the right rate automatically for each product and order type. Mixed orders (hot food with a cold drink and a cold dessert) need each item treated separately.
Cash, EPOS and HMRC
HMRC treats hospitality as a higher-risk sector because of cash takings. It uses card provider data, delivery platform reports and industry benchmarks such as typical food cost percentages to spot under-declared sales. To protect yourself:
- Put every sale through the till or EPOS — never delete or void orders without a reason
- Bank cash takings regularly and keep daily Z-reports
- Keep supplier invoices for all food and drink purchases
- Pay staff through payroll, not cash in hand
If HMRC opens an enquiry into a takeaway, it usually starts by comparing purchases with declared sales. Clean records make enquiries short and painless.
Delivery apps: Just Eat, Deliveroo and Uber Eats
When customers order through an app, you are still the one selling the food. That means:
- Declare sales at the full menu price the customer paid, not the net amount the platform pays you
- Claim platform commission and fees as a business expense
- Account for VAT on the full value of the food sold if you're VAT registered
Platforms report sellers' income to HMRC, so declared figures need to reconcile with platform statements.
Staff, payroll and tips
- Payroll: every employee must be paid through PAYE, at least the National Minimum or Living Wage for their age. Employer National Insurance is 15% above £5,000 a year per employee, but the Employment Allowance can reduce your bill by up to £10,500 a year.
- Tips: since 1 October 2024, employers must pass on all tips, gratuities and service charges to workers in full, have a written tipping policy, and keep records. Tips paid through payroll are subject to tax.
- Pensions: eligible staff must be auto-enrolled — see our auto-enrolment guide.
Allowable expenses for food businesses
- Food, drink and packaging
- Rent, business rates, gas and electricity
- Kitchen equipment (usually 100% relief through the Annual Investment Allowance)
- Delivery app commission and card fees
- Staff wages and employer pension contributions
- Licences, food hygiene training and waste collection
- Delivery vehicle costs if you run your own drivers
Sole trader, partnership or limited company?
Many takeaways start as sole traders or family partnerships. A limited company can reduce tax as profits grow and protects your personal assets, but brings more filing duties. We'll compare the options for your figures.
Frequently Asked Questions
Is takeaway food subject to VAT?
Hot takeaway food is standard-rated at 20%. Most cold takeaway food is zero-rated, but soft drinks, confectionery, crisps and alcohol are always standard-rated. Anything eaten on your premises is 20%.
How do I treat Just Eat and Deliveroo income?
Declare the full amount customers paid for the food as your sales, and claim the platform's commission and fees as an expense. Don't just record the net payout.
Do restaurants have to give all tips to staff?
Yes. Since 1 October 2024, employers in Great Britain must pass all tips, gratuities and service charges to workers without deductions, have a written policy and keep records.
Why does HMRC investigate takeaways?
Cash-heavy businesses carry a higher risk of under-declared sales, so HMRC compares purchases, card data and platform reports with declared income. Complete till records and paying staff through payroll are the best protection.
Can I claim the cost of a new kitchen?
Kitchen equipment such as fryers, ovens and fridges usually qualifies for 100% relief through the Annual Investment Allowance. Building alterations may be treated differently, so get advice on larger refits.
Accountant for Takeaways and Restaurants
Correct food VAT, clean cash records, payroll and year-end accounts for hospitality businesses in Glasgow and Clydebank.
Sardar Muhammad, AAT
Sardar is the founder of LimeTree Accounting Solutions, an AAT-accredited practice in Govanhill, Glasgow. He works with sole traders, tradespeople, landlords and small limited companies across Glasgow and Clydebank.
This guide is general information based on UK and Scottish tax rules as at 13 October 2026. It is not personal advice. Rates and thresholds change, so speak to us about your own situation.