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Specialist accounts, VAT and payroll for restaurant operators.

Restaurants carry some of the most intricate VAT rules in UK tax law alongside tronc compliance, EPOS reconciliation, high staff turnover and the constant pressure on gross profit. Whether you run a single dining room or a group of sites, accurate accounts and tight cost control are not a distraction from the business. They are how you protect the margin.

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£12.71
National Living Wage per hour from 1 April 2026, the floor for every front-of-house and kitchen worker aged 21 and over
15%
Employer National Insurance rate above the £5,000 secondary threshold, applied to every member of staff on payroll
12.5%
VAT Flat Rate Scheme sector rate for catering businesses including restaurants; the limited-cost-trader override rate is 16.5%

What makes restaurants accounting different.

Food and drink VAT across every menu line

Every restaurant meal consumed on the premises is a standard-rated catering supply at 20%, regardless of whether the individual dish would be zero-rated as a cold takeaway. Alcohol is always standard-rated. Confectionery, savoury snacks and soft drinks are standard-rated even when sold cold. Getting the VAT category wrong for even a subset of sales creates an understatement that compounds across every return. Operators running a takeaway alongside the dining room face additional hot-versus-cold analysis on every item.

Tronc compliance under the Tips Act 2023

The Employment (Allocation of Tips) Act 2023 has been in force since 1 October 2024. Every restaurant must have a written tips policy, pass 100% of qualifying tips to workers without deduction, and keep allocation records. A tronc run by a genuinely independent troncmaster allows the employer to avoid employer National Insurance on distributions; any employer involvement in who receives what destroys that exemption. Tips cannot count toward the National Living Wage under any arrangement.

EPOS reconciliation and daily takings

Till and point-of-sale systems generate card, cash and split-tender transactions across every cover. Reconciling EPOS data to bank deposits, accounting for card-processor settlement timing and matching to supplier invoices is a daily discipline. Discrepancies between declared sales and EPOS records are an HMRC trigger, particularly where cash covers form a significant part of trade.

Staff cost against covers and average spend

Labour is typically the largest operating cost after food and drink. Wage-to-sales ratio across kitchen and front-of-house varies by covers, shift patterns and menu pricing. Accounts that correctly separate tronc distributions from contracted wages, and that code staff costs against each department, give operators the data to manage rather than guess at their labour position.

How we help restaurants.

Annual accounts with food and drink margin visibility

We prepare year-end accounts structured to show gross profit on food, gross profit on drink, and labour as a percentage of revenue across each trading week. Corporation Tax is calculated and filed alongside. For sole-trader operators, we handle the self-assessment and Making Tax Digital for Income Tax obligations that apply above £50,000 from 6 April 2026.

Tronc scheme setup and payroll

We design a compliant tronc structure with an independent troncmaster, prepare the written tips policy required by the Tips Act, and run the tronc payroll alongside your main payroll each period, including RTI submissions and National Minimum Wage compliance checks for every pay reference period.

VAT returns and food rate review

We prepare and submit your quarterly VAT returns, review your menu against the eat-in, hot takeaway and cold takeaway VAT rules, and advise on the Flat Rate Scheme catering rate of 12.5% versus the standard method. Where a multi-site group uses different EPOS systems, we reconcile each site before consolidation.

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Common questions

What gross profit percentage should a restaurant target?
GP% targets vary by cuisine, price point, wet-versus-dry mix and service style, so no single figure applies across the sector. Food GP% and beverage GP% should be tracked separately and benchmarked against your own prior periods rather than presented as an industry absolute. We help operators build their own rolling GP% reports from coded accounts.
Do I charge VAT differently on eat-in versus takeaway orders?
Yes. Food and drink consumed on the premises is a catering supply and is standard-rated at 20% regardless of the individual item. Hot takeaway food is also standard-rated. Most cold takeaway food is zero-rated, but confectionery, savoury snacks, soft drinks, alcohol and ice cream are standard-rated even as cold takeaway. See HMRC Notice 709/1 at gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091.
Can a restaurant run a tronc and save employer National Insurance?
Yes, where the tronc is run by a genuinely independent troncmaster who controls all allocation decisions without employer involvement. HMRC's position is set out at NIM02922 (gov.uk/hmrc-internal-manuals/national-insurance-manual/nim02922). If the employer is involved in deciding who receives what, the National Insurance exemption is lost. Income tax via PAYE still applies to all tronc receipts.
Are casual kitchen and waiting staff employees for payroll?
Almost always yes. Zero-hours and casual arrangements do not on their own make a worker self-employed. HMRC's employment status tests look at control, substitution and mutuality of obligation. Misclassifying employed workers as self-employed leads to backdated PAYE, employer National Insurance and potential penalties. See gov.uk/employment-status/employee.

Speak to a specialist.

Tell us about your restaurants business and we will reply within 24 hours.

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Other sectors we work with

Pubs and BarsTakeawaysHotels and GuesthousesCafes and Coffee ShopsCaterers and Street Food
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