Restaurant bookkeeping in the UK: a simple routine that keeps HMRC happy

Restaurant bookkeeping means recording every sale and every cost, with the paperwork to prove it. In the UK, that means a daily Z report from your till, every supplier invoice, delivery-app statements recorded gross (not just the payout), payroll and tips kept apart, and VAT returns through Making Tax Digital software. Do it weekly and it takes about an hour. Leave it for a quarter and it takes a weekend.

This guide is general information, not tax advice. Talk to an accountant about your own business.

The routine: daily, weekly, monthly, yearly

Start each day with a clean till cash-up. Every other number depends on it.

Recording sales properly

Use the Z report as your daily sales record. It shows total sales, the split by payment type (cash, card, online) and, on most tills, the split by VAT rate.

Three habits that save trouble later:

1. Split sales by VAT rate. Eat-in food and hot takeaway are standard-rated at 20%. Most cold takeaway food is zero-rated. See our VAT on takeaway food guide.
2. Keep tips out of sales. Tips and service charge you pass to staff aren't your income. Record them in a separate tips account and pay them out under your tipping policy. Our tronc calculator works out the split.
3. Record online orders from your own ordering page as sales on the day, and card fees as a cost. Payment processors such as Stripe pay out the net amount, so gross it up.

Delivery-app payouts: always record gross

Just Eat, Deliveroo and Uber Eats pay you after taking commission and other charges. If you only record the payout, you understate your sales and your costs. You can also miss VAT you could reclaim.

Worked example: one week on a delivery app

A takeaway sells £2,000 of hot food (including VAT) through an app that charges 14% commission, plus VAT on that commission.

If you record only £1,664 of sales, you lose £336 of costs from your books, and your VAT return will be wrong. This example is illustrative: commission rates, and the amount they're charged on, vary by app and contract, so always use your own statements. See the Just Eat commission breakdown.

VAT for restaurants and takeaways

• Registration threshold: you must register if your VAT-taxable turnover goes over £90,000 in any rolling 12 months.
• Rates: eat-in food and drink, hot takeaway food and drinks, and alcohol are standard-rated at 20%. Many cold takeaway foods are zero-rated, but soft drinks, juices and most confectionery are not.
• Service charge is standard-rated. A tip freely given on top of the bill isn't.
• Flat Rate Scheme: you pay a fixed % of your VAT-inclusive turnover instead of working out VAT on each sale and cost. The rate for catering services, including restaurants and takeaways, is 12.5%. Pubs are 6.5%. "Limited cost" businesses pay 16.5%. It can save admin, but work out whether it saves money too.
• Making Tax Digital for VAT: all VAT-registered businesses must keep digital records and file through compatible software.

Making Tax Digital for Income Tax

If you're a sole trader (or landlord), MTD for Income Tax is arriving in stages, based on your qualifying income. That's your gross self-employment and property income before expenses, not profit:

A takeaway turning over £60,000 is in scope from 2026 even if its profit is much lower. You'll need software that sends quarterly updates to HMRC. Limited companies pay Corporation Tax, so MTD for Income Tax doesn't apply to them.

Cash basis or accruals?

• Sole traders: cash basis is now the standard way to record income and costs. You count money when it comes in or goes out.
• Limited companies must use accruals accounting. You count sales when made and costs when incurred, including stock.

A simple restaurant chart of accounts

Balance sheet accounts to add: cash in till, tips held for staff (a liability), VAT control, PAYE control and stock. Our free break-even calculator works from the same sales and cost lines.

What records to keep, and for how long

How long: sole traders keep records for at least 5 years after the 31 January filing deadline. Limited companies keep them for 6 years from the end of the financial year they relate to.

Software and help

Most UK restaurants use Xero, QuickBooks, Sage or FreeAgent, linked to their bank and, ideally, their EPOS. Xero's UK plans start at £18 a month ex VAT. Check your till can export daily sales by VAT rate and payment type. Compare tools in our restaurant management software guide.

An accountant who knows hospitality can set up your VAT scheme, payroll and tronc correctly from day one. That's usually cheaper than fixing it later.

Fewer app statements to untangle

Each order you move from a delivery app to your own ordering page means less commission and simpler books. Menuthere charges 0% commission. On the Lite plan (US$17 a month) and above, card payments go through your own Stripe account, so each payment and its Stripe fee show in your own Stripe dashboard. You can also download an Excel report of your orders for any period, ready for your bookkeeper. Bills can show UK VAT at 20% or 0% per item.

Take orders direct and keep your books simple.

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