VAT and sales tax for your menu prices
From the menu price to the net price and the VAT, or from the net price to the menu price. With the UK’s 20%, 5% and 0% rates or any rate you need, US-style sales tax, and a whole menu in one go.
You have the price inc VAT (the menu or receipt price) and want the net amount and the VAT.
Standard rate. In the UK it covers food and drink served on your premises, hot takeaway food, alcohol and soft drinks.
Several prices at once
Paste your menu or a column of prices, one per line. The mode, rate and rounding above are used.
How to use the calculator
- Choose what you want to do. “Remove VAT” if you have the menu or receipt price and want the net amount and the VAT. “Add VAT” if you have the net price and want the final price. “Sales tax” if your menu shows prices before tax and tax is added at the till, as in the US and Canada.
- Choose the rate. For food and drink served on your premises in the UK, it’s normally 20%. For another rate, choose “Other” and type it in.
- Enter the amount. If you’re adding VAT for the menu, you can round the result to £0.05, £0.10 or £0.50, up or to the nearest.
- For lots of prices at once, paste your menu or a spreadsheet column into “Several prices at once”: one item per line, with the price at the end. Copy the result as a table or as a list.
The formulas
- Net price = price inc VAT ÷ (1 + rate). At 20%, ÷ 1.20; at 5%, ÷ 1.05.
- VAT = price inc VAT − net price.
- Price inc VAT = net price × (1 + rate). At 20%, × 1.20.
The most common mistake is taking the percentage off the final price. At 20%, VAT isn’t 20% of what you charge but 16.67% of it, one sixth: on a £3.60 coffee, the net price is £3.00 and the VAT is £0.60. At 5%, VAT is 4.76% of the final price. The calculator rounds the net price to the penny and works out the VAT as the difference, so net plus VAT always equals the price.
Which VAT rate applies to food and drink in the UK
Food and drink you serve for eating on your premises, at the bar, in the dining room or at your outside tables, is catering, and catering is standard-rated at 20% (HMRC’s guide Catering, takeaway food (VAT Notice 709/1)).
- Hot takeaway food: 20%. Food heated so it can be eaten hot, such as fish and chips, pizza or a toasted sandwich, is standard-rated even when it leaves the premises.
- Cold takeaway food: usually 0%. Most cold food to take away is zero-rated, such as a sandwich or a salad. Some items are standard-rated even when they’re cold and taken away: confectionery, crisps, ice cream, soft drinks and alcohol.
- 5%: the reduced rate, for a few goods and services such as domestic energy. It isn’t the rate for the food and drink you serve.
The lines between eating in and taking away, and between hot and cold, have their grey areas. If you’re unsure, ask your accountant before you set prices.
US and Canada: sales tax at the till
In the US and Canada, menu prices are usually shown before tax, and sales tax is added to the check at the till. The rate depends on the state, county and city (in Canada, on the province), and some places add a separate tax on meals. Choose “Sales tax”, enter your combined local rate and you’ll see the tax and the total the guest pays. Your accountant or your state or provincial tax authority can confirm the rate that applies to you.
Other countries
For Ireland or any other country, choose “Other” and type in your rate. The maths is the same; only the rate changes. Check the rates with your accountant.
On the menu, the price the guest pays
In the UK, the prices you show to consumers must include VAT: what’s on the menu is what the guest pays. A note at the bottom such as “All prices include VAT” avoids any doubt. We cover this and the other rules in menu labelling rules.
If you’re setting new prices, start with the cost: the recipe cost calculator gives you the net price of each dish, and here you turn it into a menu price. For wine and drinks, use the pour cost calculator. The full method is in how to price a menu.
With your prices ready, make your menu with MenuDesign: upload a photo of the one you have, change the prices and download it with the VAT note at the bottom.
Frequently asked questions
What VAT rate does a restaurant or pub charge in the UK?
Food and drink served for eating on your premises, including at outside tables, is standard-rated at 20%. Hot takeaway food is also 20%. Most cold takeaway food is zero-rated, with exceptions such as confectionery, crisps, soft drinks and alcohol. If you’re unsure about an item, check with your accountant.
How do you remove VAT from a price?
Divide, don’t subtract. At 20%, the net price is the price inc VAT divided by 1.20: £12 gives £10 net and £2 VAT. If you took 20% off £12 you’d get £9.60, and that isn’t the net price.
Do menu prices have to include VAT?
In the UK, yes: prices shown to consumers must include VAT, so the menu shows what the guest pays. A note such as “All prices include VAT” avoids any doubt. In the US and Canada it’s the other way round: menu prices are usually shown before tax, which is added at the till.
How does sales tax work in the US and Canada?
Menu prices are normally shown before tax, and sales tax is added to the check. The rate depends on where you are: state, county and city in the US, province in Canada, and some places add a separate tax on meals. Choose “Sales tax” in the calculator and enter your combined rate.
Are the prices I enter saved?
They’re saved only in this browser, so they’re there when you come back. Nothing is sent to a server and you don’t need to sign up.