Brighton's hospitality sector is one of the most vibrant in the South East — but it also faces unique financial challenges. Seasonal cash flow, tips and tronc schemes, complex VAT treatment, and high staff turnover all require specialist handling.
We work with restaurants, cafes, bars, B&Bs, and hotels across Brighton. We understand the sector's specific challenges and how to manage them efficiently.
Get in TouchHospitality VAT goes wrong most often at the till, because the rate depends on how the customer takes the item away, not just what it is.
| Supply | VAT treatment |
|---|---|
| Food and drink eaten in a restaurant, cafe or bar | Standard rate, 20% |
| Hot takeaway food and hot takeaway drinks | Standard rate, 20% |
| Cold takeaway food, such as a packed sandwich or salad | Zero-rated, unless it is always standard-rated |
| Crisps, sweets, bottled water and alcohol | Standard rate, however they are sold |
| Hotel and B&B accommodation | Standard rate, 20% |
| Service charge added to the bill | Standard rate, 20% |
| A tip freely given by the customer above the bill | No VAT due on the tip |
The same sandwich is zero-rated to take away and 20% to eat in. Your EPOS needs a separate eat-in and takeaway sales button for each, or the VAT return will be wrong in one direction or the other. Reconcile the till reports to the VAT return every quarter, not only at the year end.
If your turnover is £150,000 or less, the Flat Rate Scheme can be worth testing. You pay a fixed percentage of VAT-inclusive turnover and do not reclaim VAT on purchases, apart from capital items over £2,000. The catering rate for restaurants and takeaways is 12.5%, pubs 6.5% and hotels or accommodation 10.5%.
By law, tips must be passed to workers without deductions, and you need a written tips policy that follows the statutory code of practice. Tips cannot be used to top staff up to the minimum wage. From April 2026 the rates are £12.71 an hour for age 21 and over, £10.85 for 18 to 20, and £8.00 for under 18s and apprentices.
A tronc is a separate pay-sharing arrangement run by an independent troncmaster. Payments from a genuine tronc are free of National Insurance, but the troncmaster must run PAYE on them. If the employer has a hand in deciding who gets what, the payments are treated as pay and National Insurance is due. Getting this wrong is a common source of HMRC enquiries in restaurants.
Related: VAT returns, payroll, bookkeeping and our guide to payroll duties for small businesses.
Sources: GOV.UK: Catering and takeaway food, VAT Notice 709/1, GOV.UK: Tips at work, HMRC: Tips, gratuities, service charges and troncs (E24), GOV.UK: VAT Flat Rate Scheme, GOV.UK: National Minimum Wage rates.
Hot takeaway food is standard-rated at 20%. Most cold takeaway food, such as a packed sandwich, is zero-rated, although the same item eaten on the premises carries 20%. Your till should record eat-in and takeaway sales separately so the VAT splits correctly.
No. Tips, gratuities and service charges cannot be used to make up a worker's pay to the National Minimum Wage. From April 2026 the rate is £12.71 an hour for workers aged 21 and over, and £10.85 for ages 18 to 20.
A tronc is a pay-sharing arrangement for tips, run by an independent troncmaster. Payments from a genuine tronc are free of National Insurance, but the troncmaster must operate PAYE on them. If the employer controls how the pot is shared, National Insurance is due.
It can help when you pay little VAT on your purchases. Catering businesses pay 12.5% of VAT-inclusive turnover, pubs 6.5% and hotels 10.5%, and you can join with expected taxable turnover up to £150,000. We compare it with standard accounting before you choose.