UK hospitality VAT is a minefield of edge cases. Eat-in food: 20%. Takeaway hot food: 20%. Takeaway cold food: 0% (sometimes). Hotel rooms: 20%. B&B with breakfast: 20%, but holiday rentals over 28 days move to a different regime. Pub drinks: 20%. Pub food during the 2020-2022 temporary reduction: 5% (long expired, but still in the records). 4invoices applies the right rate per line item and per scenario, so your daily takings tally with HMRC's expectations.
Eat-in vs takeaway — same food, different VAT
Eat-in food and drink is standard-rated 20%. Takeaway cold food (sandwiches, cold drinks, cold dessert) is zero-rated. Takeaway hot food (heated above ambient temperature for the purpose of being consumed hot) is standard-rated. We split the till point or invoice by service type so the VAT comes out right at quarter-end.
Hotel accommodation — distinguishing room from extras
The room rate is standard-rated 20%. Continental breakfast is standard-rated 20%. Mini-bar consumables can be 20% (hot food) or 0% (cold food). The reduced rate doesn't apply to UK hospitality currently (the 12.5% rate for 2020-2022 has expired). Bills generated from your PMS (Property Management System) integration get the right VAT treatment per line.
Corporate B2B invoicing — VAT-registered companies want VAT invoices
Many hotels and restaurants charge consumer prices on the till but need to issue VAT invoices for corporate customers (with the customer's name, VAT number and supply details). 4invoices lets you convert a till sale into a proper VAT invoice retrospectively — same transaction, two outputs, the second one going to the corporate customer for their expense reclaim.
Hospitality VAT — what changed and what hasn't
Between July 2020 and March 2022, UK hospitality benefited from a temporary reduced VAT rate (5%, later 12.5%) to support the sector through COVID. That rate has expired — since 1 April 2022, the standard 20% rate applies. The temporary rates only matter now if you're correcting an older period: we keep the historical rates available so amendments work correctly.
Beyond the headline rate, the eat-in vs takeaway distinction is the most common compliance question. HMRC's test is essentially the customer's intention at the point of sale. If they're eating at a table you provide (inside or outside), 20%. If they're taking it away to consume elsewhere, the food's temperature determines the rate (hot = 20%, cold = 0%). For ambiguous cases — food eaten in your premises but at a counter, food sold from a kiosk in a shopping centre with seating around — HMRC's published guidance and case law give clearer answers than the rules themselves.
Drinks are simpler: all alcohol is 20%, all soft drinks for immediate consumption are 20%, water and tea/coffee can be 20% (hot, sold for immediate consumption) or 0% (sold in bottles for takeaway). The VAT engine in 4invoices applies these by product category — set up your menu once with the right category per item, and every till transaction and invoice gets the right VAT treatment automatically.
Frequently asked
Do you integrate with our EPOS system?
We integrate with the major UK hospitality EPOS providers — Square for Restaurants, Lightspeed Restaurant, Toast, NCR Aloha, Zonal, Tevalis. Transactions flow from the EPOS to 4invoices in near-real-time, with VAT pre-categorised. For PMS (Property Management Systems) — Mews, Cloudbeds, RoomRaccoon, Little Hotelier — we integrate at the folio level.
Holiday rentals — when does VAT apply?
Short-stay holiday accommodation (less than 28 consecutive days per customer) is standard-rated 20% if you're VAT-registered. Long-stay residential (over 28 days) is exempt — and exempt supplies don't count toward the £90,000 registration threshold. The platform tracks the duration per booking and applies the right treatment.
Service charges and tips?
Optional service charges added to a bill are standard-rated 20% (treated as part of the supply). Voluntary tips paid directly to staff (cash or via Tronc) are outside VAT scope. We separate these on the till and the invoice so the right treatment applies and your staff Tronc records are clean.
Set up hospitality invoicing today
Free trial. Tell us your venue type (restaurant, pub, hotel, B&B), connect your EPOS or PMS, see VAT applied correctly across the till.