What are the VAT rules for catering invoicing?
VAT on catering invoices is more complex than it looks. Hot food, cold sandwiches, alcoholic drinks, equipment hire: each can carry a different rate. Get it wrong and HMRC may issue a correction or disallow a client's input tax claim. This guide covers the key UK VAT rules caterers need to know.
Which VAT rate applies to catering?
In the UK, the standard VAT rate is 20%, and most catering falls under it. The exceptions are worth knowing, because they are narrower than people assume:
- 20% VAT applies to hot food, hot drinks, and anything consumed on the premises. Buffets, served meals and canapés at events all sit here.
- 0% VAT applies to cold takeaway food: cold sandwiches, salads and most unprocessed food sold to take away rather than eat on site.
- 20% VAT applies to all alcoholic drinks, on or off the premises.
The rule that catches people out is drinks. It is not true that cold drinks follow cold food to zero. Under VAT Notice 701/14, most beverages are standard-rated in their own right, and only a short list is zero-rated.
| Cold drink, sold to take away | VAT |
|---|---|
| Milk and flavoured milk drinks, including milkshakes | 0% |
| Cold tea and cold coffee | 0% |
| Mineral, table and spa waters sold as beverages | 0% |
| Fruit juices and juice concentrates | 20% |
| Smoothies | 20% |
| Carbonated drinks: lemonade, cola, tonic, soda | 20% |
| Sports and energy drinks | 20% |
| Anything alcoholic | 20% |
And there is a rule that overrides the whole table. HMRC states that "all hot beverages and any drinks, including zero-rated drinks sold for consumption on your premises are standard-rated". So the bottle of water that is zero-rated when a guest takes it away becomes 20% the moment it is served at a table. The zero rate only survives on genuine takeaway.
For most event caterers this simplifies to a single line: the food is hot or eaten on site, so 20% applies across the invoice. The exceptions only start to matter when you also run a takeaway counter or drop off cold food without service.
How do staffing and service charges work for VAT?
If your catering service is all-in, with food, service and staff bundled together, HMRC treats the whole supply as a single catering service at 20%. You don't need to split it out.
If you invoice staff hire separately (for example, providing a crew for a client who is organising their own food), that's a labour supply rather than a catering service. Labour alone is still subject to VAT at 20%, so the rate is the same, but the nature of the supply on the invoice matters for VAT reclaim purposes.
If you're unsure how to classify a particular supply, a quick question to your accountant is worth it. A wrong classification on an invoice can affect your client's ability to reclaim VAT.
What must a VAT invoice include?
If you are VAT-registered and your client is a business (or wants to reclaim VAT), you must issue a full VAT invoice. It needs:
- Your business name, address, and VAT registration number
- An invoice date and a unique sequential invoice number
- Your client's name and address (and their VAT number if they are VAT-registered)
- A description of what was supplied
- The quantity and unit price of each item
- The VAT rate(s) applied and the VAT amount for each line
- The total amount excluding VAT and the total amount including VAT
If you mix zero-rated and standard-rated items on one invoice, say cold canapés alongside hot food, each line must show the correct rate. A single catch-all line is not acceptable to HMRC.
Do the same rules apply to food trucks and delivery?
Yes. A food truck selling hot food attracts 20% VAT. Cold food sold to take away is zero-rated, same rules as any caterer. The key question is always: is the food hot or cold, and is it eaten on the premises or taken away?
For delivered catering (corporate lunches, drop-and-go buffets), HMRC looks at whether the food was hot when it left your kitchen or is intended to be reheated. Food delivered hot for immediate consumption is 20%. Cold meal kits may be zero-rated, depending on the contents.
What changes when you invoice a business client?
Business clients who are VAT-registered can reclaim the VAT you charge them, so your 20% does not necessarily increase their cost. They need a full VAT invoice to do this. Make sure your invoice includes all the required fields above, especially their VAT number if they've provided it.
When invoicing private individuals, you still charge VAT at the correct rate, but you don't need to include their VAT number (they don't have one).
Frequently asked questions
Do I need to be VAT-registered to invoice for catering?
Only if your VAT-taxable turnover exceeds the registration threshold (£90,000 as of 2024). Below that, you can't charge VAT and don't need to. Once you cross the threshold, registration is compulsory and you must charge VAT on all standard-rated supplies.
Is equipment hire (crockery, linen, tables) subject to VAT?
Yes, equipment hire is a standard-rated supply at 20%. If you bundle it into your catering package, it's all 20% anyway. If you invoice it separately, make sure it shows 20% VAT rather than zero-rating it by mistake.
What if I sent a VAT invoice with the wrong rate?
Issue a credit note to cancel the original invoice, then issue a corrected invoice. Keep both documents. If your client has already reclaimed VAT based on the incorrect invoice, they will need to adjust their own VAT return as well.
Is bottled water zero-rated for VAT?
Sold to take away, yes. HMRC zero-rates mineral, table and spa waters held out for sale as beverages. But the moment that same bottle is served at a table or handed out at an event you are catering, it becomes standard-rated at 20%.
Why is orange juice 20% when a sandwich is 0%?
Because beverages are treated separately from food. Cold takeaway food is zero-rated, but juice and juice concentrates are listed as standard-rated beverages under VAT Notice 701/14, alongside smoothies, carbonated drinks and sports drinks. The temperature is not what decides it.
Are soft drinks at 0% VAT or 20%?
It depends on the drink, not just on whether it is cold. Juice, smoothies, carbonated drinks and sports drinks are standard-rated at 20% in their own right, even sold cold to take away. Only a short list is zero-rated: milk and milkshakes, cold tea and cold coffee, and mineral or table water sold as a beverage. And any drink served for consumption on your premises is 20% regardless, including the zero-rated ones.
Do I need a separate invoice for each event?
Not a legal requirement, but it is strongly recommended. A per-event invoice makes your records cleaner, makes it easier to justify line items if HMRC ever queries your returns, and helps your client allocate costs correctly if they're reclaiming VAT.
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