VAT on food and drink
Eat-in is standard-rated; hot takeaway usually is; most cold takeaway is zero-rated. We set your EPOS categories to the right liability, line by line, and watch the £90,000 VAT threshold for seasonal spikes.
Who we helpIndustry guide
The hospitality accountant who knows the trade.
Food VAT, tronc, payroll and margins sorted by accountants who know hospitality, so you can stay on the floor.
You run a restaurant, pub or hotel, not a back office. As a specialist hospitality accountant, we take VAT on food and drink, tronc and tips, payroll for seasonal staff and your tax off your hands. Eat-in or takeaway, a single site or a small group, we know the trade and we keep HMRC happy. Book a call with a restaurant accountant who actually gets it, on one fixed monthly fee.
- 4.9 Google · 63 reviews
- ACCA-qualified
- 30-day money-back
The problem
Why a Generic Accountant Often Gets Hospitality Wrong
Most accountants treat a restaurant like any other small business. They file last year and miss what cuts your tax bill.
Mis-rated VAT on your menu. A tronc that fails an HMRC look. Fit-out spend left unclaimed. Wastage no one is measuring. So you overpay, and you never quite know why.
A specialist hospitality accountant works the other way round. We know the trade, so we know where your money leaks, from the till buttons to the stock room. We do not just record your numbers. We improve them.
Tailored services
What We Handle, So You Don't Have To
01 02 Tronc, tips and the Tipping Act
We build and document an independent tronc so card tips and service charges reach staff in full and free of National Insurance, in line with the fair-distribution rules now in force.
03 Payroll for shift teams
High-churn rotas, holiday pay on variable hours, minimum wage by age band and the tronc run together. RTI, payslips and auto-enrolment, all handled.
04 Stock, wastage and margins
We turn stock takes and supplier invoices into food and drink gross-profit percentages, so you can see waste, theft and over-portioning before they eat your profit.
05 Cash handling and daily takings
Daily sales reconciliation from your POS, cash-up procedures and clean records, ready for any HMRC check on a cash-heavy trade.
06 Accounts, tax and year-end
Your accounts and tax return filed on time, with the covers, wage-cost and margin numbers that tell you how the business is really doing.
VAT on food and drink
Eat-In, Takeaway and the VAT Trap on Your Menu
VAT on hospitality food is one of the most misunderstood areas in the trade, and one of the easiest to get expensively wrong.
Eat-in food and drink is always standard-rated. Hot takeaway is standard-rated too when it meets the catering tests, food kept hot, heated to order or eaten on the premises. Cold takeaway, a sandwich to go, is usually zero-rated.
Then come the edge cases: a hot main with a cold side, soft drinks and confectionery that stay standard-rated even cold, deposits, no-shows and service charges. Get the menu mix wrong and you either hand HMRC money you never owed or quietly build a liability that surfaces at inspection.
We map every till button to the correct VAT liability and reconcile it against your VAT returns, so each transaction is rated right and nothing is left to guesswork.
Tronc and tips
Tronc Schemes, Tips and the National Insurance Saving
Tips are now a legal entitlement. Under the Tipping Act, tips and service charges you control must reach your staff in full, and you have to keep a written policy showing how they are shared.
How you pay them out decides the tax. Run tips through your normal payroll and they attract National Insurance for both you and your team. Run them through a properly independent tronc, with a troncmaster who acts without your direction, and the payments are usually free of employer and employee National Insurance.
That is a real saving on a wage bill that is often your single biggest cost. But it only holds if the tronc is genuinely independent and documented. A line on a payslip is not a tronc.
We set up the tronc, appoint and brief the troncmaster, handle the PAYE that still applies to tronc income, and keep the paperwork an HMRC inspector can ask to see.
Paying your team
Payroll for Seasonal, Casual and Shift Staff
Hospitality payroll is high-churn by nature. Starters and leavers every month, students over summer, holiday pay on hours that change every week, and minimum wage that steps up with age.
On top of that sits Employer National Insurance, pension auto-enrolment for eligible staff, and the tronc running alongside the main payroll. Miss an RTI filing or an enrolment duty and the penalties stack up fast.
We run your payroll end to end: payslips, RTI to HMRC, auto-enrolment and the tronc, on Xero, QuickBooks, FreeAgent or Sage. Your team gets paid right, and you stay on the good side of HMRC.
Stock and margins
Stock, Wastage and the Margins That Make or Break a Site
In hospitality, the difference between a good month and a loss is often a couple of points of gross margin, and most operators cannot see it until the year-end accounts land.
We turn your stock takes, supplier invoices and till sales into live food and drink gross-profit percentages. That shows you where margin is leaking: over-portioning, wastage, theft, or a supplier price rise you never passed on.
- Food gross-profit percentage, by category
- Wet and dry margins tracked separately
- Wastage and yield against your stock takes
- Wage cost as a percentage of sales
- Covers, average spend and revenue per head
- Supplier price creep flagged early
Good bookkeeping is what makes these numbers trustworthy, so we set up daily sales reconciliation from your POS, not a shoebox in January.
Allowable expenses
What Can a Restaurant or Hotel Actually Claim?
More than most operators realise. A good restaurant accountant starts by claiming every cost you are genuinely owed, especially the ones buried in a builder’s fit-out invoice.
- Kitchen equipment, ovens, fridges and prep kit
- Front-of-house fit-out, bar, furniture and lighting
- EPOS, booking and reservation software
- Crockery, glassware, linen and uniforms
- Cleaning, laundry and waste collection
- Music, alcohol and other licence fees
- Marketing, delivery-platform fees and commissions
- Accountancy, insurance and bank charges
On a refurbishment, plant and machinery, integral features and the building shell are treated differently for tax. We split the spend so nothing claimable sits in the wrong bucket, and we keep your bookkeeping ready for Making Tax Digital.
Business structure
Sole Trader, Partnership or Limited Company
A small cafe might run fine as a sole trader, paying Income Tax and National Insurance through Self Assessment. Two owners often start as a partnership.
Grow, take on premises and staff, and a limited company usually keeps more in your pocket and protects your home if a site fails. You pay Corporation Tax, then take a salary and dividends.
A company means more admin: accounts at Companies House and tighter bookkeeping. Each structure has trade-offs, and the right answer depends on your profit, your plans and your appetite for risk.
We will model the options on your real numbers and tell you which one puts more money in your pocket.
Simple, fixed fees
Fixed Monthly Pricing & Packages for Hospitality
Most independent restaurants, cafes and small hotels pay between £99 and £199 a month. That is less than a quiet midweek service.
No hourly rates. No surprise bills. One fixed fee, a named, qualified accountant who knows hospitality, and a 30-day money-back guarantee.
Essentials
Startups and small companies that need essential compliance and year-end support without VAT or payroll.
£99/month- Preparation of Company Year-End Financial Statements
- Year End Corporation Tax Computation
- Submission of CT600 to HMRC
- Statement of Account submissions to Companies House
Premium Plus
Growing businesses that need complete accounting services, VAT return management, and payroll handling.
£199/month- Everything in Essentials
- Quarterly VAT return calculation and submission
- Payroll and benefits management
Enterprise
Established businesses that want strategic mentoring, business planning, and a part-time finance director driving growth.
£499/month- Everything in Premium Plus
- Business mentoring
- Part-time finance director
- Business plan
Trusted by hospitality
What Our Clients Say.
I’ve used several accountants in the past, but hands down there is no one better than Harvey at Zmartly. He really understands exactly what advice you’re looking for and explains everything clearly and professionally. Nothing ever feels rushed…
HeenaVerified Google review · 4 months agoI’ve had an excellent experience working with Zmartly. Harvey and the team are professional, responsive, and genuinely supportive. They explain things clearly, stay on top of deadlines, and always look for practical ways to save tax and improve…
land4 success (chill feel good)Verified Google review · 5 months agoI started working with Zmartly Accountants after having serious issues with my previous accounting firm. They were missing deadlines, incorrectly calculating VAT, constantly late, and extremely difficult and frustrating to communicate with. Switching to Zmartly was a huge…
Jorge Carballo GomezVerified Google review · 5 months agoGreat proactive service always up to date regarding accounting legislation. Harvey and Team will be always helping you with advise how to make your books look good. Already over 4 years using their service very happy.
Auris Property AcademyVerified Google review · 8 months agoI've had a terrible experience with multiple accountants. Zmartly have been incredible. If you do ecommerce / Amazon FBA you definitely need to go with someone who understands the complexities with it. Thanks to Harvey and his amazing…
Sean BarringtonVerified Google review · 5 months agoI’ve used several accountants in the past, but hands down there is no one better than Harvey at Zmartly. He really understands exactly what advice you’re looking for and explains everything clearly and professionally. Nothing ever feels rushed…
HeenaVerified Google review · 4 months agoI’ve had an excellent experience working with Zmartly. Harvey and the team are professional, responsive, and genuinely supportive. They explain things clearly, stay on top of deadlines, and always look for practical ways to save tax and improve…
land4 success (chill feel good)Verified Google review · 5 months agoI started working with Zmartly Accountants after having serious issues with my previous accounting firm. They were missing deadlines, incorrectly calculating VAT, constantly late, and extremely difficult and frustrating to communicate with. Switching to Zmartly was a huge…
Jorge Carballo GomezVerified Google review · 5 months agoGreat proactive service always up to date regarding accounting legislation. Harvey and Team will be always helping you with advise how to make your books look good. Already over 4 years using their service very happy.
Auris Property AcademyVerified Google review · 8 months agoI've had a terrible experience with multiple accountants. Zmartly have been incredible. If you do ecommerce / Amazon FBA you definitely need to go with someone who understands the complexities with it. Thanks to Harvey and his amazing…
Sean BarringtonVerified Google review · 5 months ago
4.9
Google · based on 63 reviewsCommon questions
Frequently Asked Questions
Broadly yes. Hot food provided to the customer is standard-rated for VAT if it meets one of HMRC's five tests (such as being kept hot or heated to order), so a hot takeaway pizza is standard-rated. Cold takeaway food that isn't on the always-standard-rated list (like a plain sandwich) is usually zero-rated. Anything eaten on your premises is always standard-rated. We map your menu so each till button charges the correct rate.
They can, if they go through a genuinely independent tronc. Tips distributed by a troncmaster who acts without the employer's direction or indirect control are normally exempt from National Insurance for you and your staff. PAYE income tax still applies. Since 1 October 2024 you must also pass on tips you control in full and have a written policy. We set the tronc up so it both saves the NIC and stands up to HMRC scrutiny.
Usually far more than people expect. Integral features such as electrical, heating, ventilation and lighting systems qualify for plant and machinery allowances, with the Annual Investment Allowance covering up to £1,000,000 of qualifying spend and full expensing available on qualifying new main-rate plant. The building shell may qualify for the Structures and Buildings Allowance. We run a capital allowances review of the contractor's invoices so nothing claimable is missed.
It might trigger the Tour Operators' Margin Scheme (TOMS). If you buy in travel, excursions or third-party accommodation and resell them in your own name alongside your rooms, you may have to account for VAT on your margin only, with no input VAT recovery on the bought-in elements. Many hoteliers fall into TOMS without realising. We check whether it applies and account for it correctly.
You must register once your VAT-taxable turnover exceeds £90,000 in a rolling 12 months, or if you expect to breach it in the next 30 days. You can deregister if turnover falls below £88,000. Seasonal trade can push you over temporarily, so we monitor your rolling figure rather than waiting for the year-end.
If you're a sole trader or landlord, MTD for Income Tax phases in by income: from April 2026 if your qualifying income is over £50,000, April 2027 over £30,000, and April 2028 over £20,000. It means digital records and quarterly updates. If you trade through a limited company this particular regime doesn't apply, though your VAT is already under MTD. We get your bookkeeping software ready ahead of your start date.
Fixed monthly pricing of £99, £199 or £499 depending on the support you need, billed rolling monthly with no long lock-in. You get a named, qualified accountant, replies within 72 hours, and a 30-day money-back guarantee. We work in Xero, QuickBooks, FreeAgent and Sage.
Guides for hotels & restaurants
Plain-English explainers, kept current with the latest HMRC rules.
Stop guessing. Stop overpaying. Let's sort your tax once and for all.
Zmartly Ltd · 20–22 Wenlock Road, London N1 7GU · 020 8175 5145 · info@zmartly.co.uk
ICAEW, ACCA and AAT qualified accountants.
Further reading