VAT and accounting for delivery app sales

Who makes the sale

Under the rules in force on 3 November 2026, a UK restaurant, café or takeaway selling food through Deliveroo, Uber Eats or Just Eat accounts for VAT on its own food sales. The app takes commission from each order as its charge to you.

HMRC and the Treasury describe this in their June 2026 consultation on online marketplaces. It names takeaway food delivery platforms and the restaurants that use them, and proposes making the platform liable to account for the VAT on those sales. That change is planned for October 2027. Until then the VAT on the food is yours to declare.

Each app's statement is the record of those sales. Keep it with your own till or kitchen screen report for the same orders, so each order can be traced from the customer's payment to the payout in your bank.

The VAT rate on each item

VAT Notice 709/1 lists "delivery of cooked ready-to-eat food or meals" among supplies in the course of catering, which are standard-rated. Hot takeaway food is standard-rated in any case. Cold takeaway food is zero-rated as a retail supply unless it is a type that is always standard-rated, such as crisps, sweets and bottled water. Crisps, sweets and bottled water ordered with a meal carry 20%.

Where hot and cold items are sold together for one price, such as a meal deal, the value of each item is worked out so each carries the right rate. Set up the app menu with the same VAT codes as your till, item by item.

If your own staff deliver and you charge customers for delivery, the charge is part of your sales. VAT Notice 709/1 points to Notice 700/24, Postage, delivery and direct marketing, for the VAT on delivery charges. Drivers on your payroll are paid at least the National Minimum Wage for their hours.

Gross sales, commission and the payout

An app pays you the order value less its commission and any other charges. The payout is the net of two things: your sale and the app's charge to you. Both go in the books.

One week of app orders and the payout

• Orders of hot food, as the customer paid£2,400.00
• Output VAT in those sales, one-sixth£400.00
• Net sales£2,000.00
• App commission at an example 25% of £2,400−£600.00
• VAT charged on the commission−£120.00
• Paid into your bank£1,680.00

On the VAT return, the £400 is output VAT on your sales. If the app gives you a VAT invoice for the commission, the £120 is input VAT you can reclaim. HMRC VAT Notice 700 says you must hold valid evidence of the supply to reclaim input tax, and a VAT invoice is that evidence.

At the level in the example, the VAT on commission comes to £1,560 a quarter. Download the app's VAT invoices with each statement: VAT with no invoice behind it cannot go on the return. A business that is not registered for VAT cannot reclaim it, so for that business the VAT on commission is part of the cost of selling through the app.

Recording only the £1,680 payout as sales understates sales by £720 a week including VAT, or £37,440 over 52 weeks, and leaves the commission out of your costs. The VAT return then shows the wrong sales and purchases, and the turnover in the accounts is too low.

The VAT registration threshold

A business that is not registered for VAT has to watch its taxable turnover against the £90,000 threshold. Taxable turnover is the total value of everything sold that is not exempt or outside the scope of VAT, including zero-rated cold takeaway food. App orders count at their full value.

A café below the VAT threshold on its own figures

Recorded from the payouts

Counter sales £72,000 and app payouts £18,000.

£90,000

Recorded from the orders

Counter sales £72,000 and app orders £24,000, before commission.

£96,000

Check the 12-month total at the end of every month: counter sales, app orders at their full value and any other taxable sales such as function hire.

The café in that example has passed the threshold, although its bank statements show £90,000. It had to register within 30 days of the end of the month it went over.

A business on the Flat Rate Scheme pays its sector percentage, 12.5% for catering, on its turnover. Turnover taken from payouts understates that too. The scheme is open to businesses with VAT turnover of £150,000 or less.

Refunds, promotions and tips

App statements show refunds for missing or wrong items, promotions, adjustments to earlier orders and fees other than commission. Record each line from the statement under its own heading.

• Refunds to customers reduce your sales and the output VAT on them.
• Promotions you fund, such as a discount on the menu price, reduce the sale. Notice 700 says that where a customer pays a discounted amount under an unconditional discount, VAT is based on the discounted amount.
• Other fees the app charges are costs, with VAT reclaimed where the app gives a VAT invoice.

Read the terms of any promotion the app runs before joining it, and ask us how it is treated for VAT if it is funded partly by the app.

Tips added in an app for your kitchen or front-of-house staff are usually received by the business, which makes them employer-received tips under the Employment (Allocation of Tips) Act 2023. They go into your written tipping policy and tipping record and are paid out in full by the end of the month after the customer paid. HMRC guidance E24 says tips given freely by the customer are outside the scope of VAT, so they are kept out of sales on the VAT return.

Pricing on the apps

Commission comes out of the price the customer pays, so a dish sold through an app at the same price as in the restaurant leaves less behind. Work out each app price from the cash you need from the dish after food cost and commission.

A dish with £3.75 of ingredients, on the menu at £15

• In the restaurant at £15: net sales £12.50 less food £3.75£8.75
• On an app at £15: £12.50 less food £3.75 and commission £3.75£5.00
• App price that leaves the same £8.75 after 25% commission£21.43

Packaging adds to the cost of each order and belongs in the costing for app dishes. Read each app contract for what the commission covers and which other fees apply. Review the app menu prices each time your food costs or the commission rate change.

Report app sales as their own department in the monthly figures, with the commission set against them. The food gross profit stays comparable with the restaurant, and the cost of selling through each app shows up as a line of its own.

Bookkeeping each month

1. Download every statement from each app for the month, with its VAT invoice for commission and fees.
2. Post gross sales by VAT rate, commission, fees, refunds and adjustments to a separate clearing account for each app in Xero.
3. Match each payout in the bank against the clearing account. The balance left is money the app still owes you.
4. Check the app's order totals against your till or kitchen screen for the same dates.
5. Keep the statements and invoices for at least 6 years, the period for VAT records.

From October 2027

At Budget 2026 the government confirmed that online marketplaces will become responsible for collecting VAT on sales by UK VAT-registered businesses, and by any other UK business above a minimum annual sales threshold per platform of £90,000. The change is planned for October 2027. Secondary legislation in 2027 will set the threshold, the start date and other details, so none of it is law yet.

The threshold is set per platform, so keep each app's sales apart in the books now. Know your annual sales through each of Deliveroo, Uber Eats and Just Eat, and whether each one is above or below £90,000, so that the effect on your VAT returns and cash can be worked out once the rules are published.

The consultation describes the accounting envisaged: "a deemed zero-rated supply will take place between the businesses and OMP", and the platform charges and accounts for VAT at the relevant rate. The government says businesses will still recover input tax as they do now. It also expects a cash flow effect, because the VAT a business now holds until its return will be collected by the platform, and it notes possible effects for businesses on the Flat Rate Scheme. Check your app contracts and VAT set-up once the regulations are published.

Common mistakes

• Recording the payout as sales.
• Using one VAT rate for every item on the app menu.
• Leaving app sales out of the turnover used to check the VAT threshold.
• Reclaiming VAT on commission with no VAT invoice from the app.
• Including customer tips in sales on the VAT return.
• Joining an app promotion without knowing who funds the discount.

How we help

We set up a clearing account for each app, post the statements every month, match the payouts to the bank and file your VAT return with the right rates. See accounts and VAT, or try the eat-in and takeaway VAT calculator.