VAT in the food industry

This article has been checked for accuracy on the 28th November 2025. 

VAT in the food industry

VAT can generally be tricky to get your head around at the best of times but when it comes to the world of catering it’s a whole new kettle of fish.

Zero-rated food

So before we go any further let’s remember that this applies to only businesses who are VAT registered e.g. over the VAT threshold of £90,000 turnover or voluntarily. If you would like to find out why you might voluntarily register for VAT and how that works for some food traders then read our VAT Explained article before you delve into this one. Now, you may know that some foods are zero rated and some are standard rated, for example, cakes are zero-rated (0% VAT charged) and biscuits are standard rated (20% VAT charged). But do you know that regardless of whether it’s zero or standard rated, if you want to eat food inside the café or restaurant in which you purchased it you will be charged VAT. And do you know that if food is heated for the purpose of being eaten hot, it is standard-rated for VAT, even when taken away. The mind boggles, doesn’t it, but don’t worry we are on hand to put you straight. Who would’ve thought you could explain VAT with Sushi but that’s just how we roll (see what we did there).  

The Difference in Tax Treatment for Hot and Cold Food

Ok so let’s look at our variables. First we have the food itself, is it zero or standard-rated? Then we have the temperature, is it hot or cold? Then we have the environment, is it eat in or take away? So if you’re a food store owner e.g. a green grocer then you only have to worry about the first variable but the next two come hand in hand.

Eating in always attracts standard-rate VAT, regardless of whether the food is hot or cold.

Takeaway cold food is normally zero-rated unless it is: • supplied for eating on premises (tables, benches, seating areas), or
• a product that is standard-rated by law (e.g., ice cream, confectionery, drinks).

Takeaway hot food is always standard-rated if it is heated for the purpose of being eaten hot.

A Real Life Example: The Sushi Saga

So here’s where sushi comes into our explanation. Traditionally Sushi is raw fish accompanied with cooked rice which seems simple enough until you want to sell it in a takeaway shop. Back to our variables, is it zero or standard, is it hot or cold, is it eat in our take away? All uncooked meat including fish is zero rated but this is where it becomes taxing. Like we said, all food which is consumed where it is served, whether it be cooked, uncooked, hot or cold, is subject to standard rate VAT charges. Cold takeaway food is generally zero-rated unless it falls into a category that is always standard-rated (such as confectionery, most drinks or ice cream). Hot takeaway food is standard-rated if it has been heated for the purpose of being eaten hot.

Based on the above we can agree that that sushi, comprised of raw fish and cooked rice which is chilled, is zero rated and it will remain zero rated if it is taken away. But what if you want to introduce a seating area to a takeaway shop? You must charge standard rated tax on any sushi which is prepared, bought and consumed on the premises regardless of what it’s comprised of or what temperature it is. Whether you’re a sole trader, a small business, or a larger organisation, our team of experts have the experience to deliver a solution specifically tailored to meeting your tax needs. Why not get an Instant Quote and see for yourself how we can help you?