Industry specialists
Accountants for Hospitality, Cafés & Restaurants
At a glance
- Tips law: since 1 October 2024, employers must pass on 100% of qualifying tips to workers fairly, with a written policy and records — a properly run tronc also saves National Insurance
- Food VAT is a maze: hot takeaway food is standard-rated, most cold takeaway is zero-rated, eat-in is standard-rated, alcohol always standard-rated
- Delivery platforms (Deliveroo, Just Eat, Uber Eats) remit net of commission — gross sales must still be recorded for VAT
- Gross margin discipline: successful operators watch food cost (typically targeting 25–35%) and labour percentages weekly
- Typical fees: £83–£227/month for a VAT-registered restaurant company with payroll on our benchmarks, plus payroll per-employee charges
The tronc question every operator now faces
Since October 2024, keeping any part of staff tips is unlawful — allocation must be fair, documented, and paid by the end of the following month. Run through a compliant tronc with an independent troncmaster, tips escape employer and employee National Insurance entirely (saving roughly 15% employer NI versus putting them through normal pay). Setting the tronc up properly — scheme rules, troncmaster independence, PAYE registration — is a one-off job a hospitality accountant does routinely.
VAT: the most error-prone sector there is
A single café order can contain three VAT treatments — a hot pie (standard), a cold sandwich taken away (zero), and a bottle of beer (standard, and licensed). Till systems must be configured product-by-product, and delivery platform sales reconciled gross of commission. HMRC compliance checks in hospitality focus almost entirely on VAT and cash controls; clean daily reconciliation is your defence.
Payroll, casual staff, and the cost of getting rotas wrong
High staff turnover, students, split shifts, and minimum-wage rises every April make hospitality payroll heavier than headcount suggests. Auto-enrolment still applies to casual staff who qualify, holiday pay accrues on irregular hours (12.07% accrual is back for irregular-hours workers), and National Minimum Wage compliance — including uniform costs and unpaid trial shifts — is actively enforced with public naming. A sector-savvy accountant bundles payroll and keeps you off that list.
Frequently asked questions
Do I have to run a tronc?
No — but you must pass on 100% of tips fairly either way. A tronc is simply the most tax-efficient compliant route: fairly allocated tips paid via an independent tronc avoid National Insurance that would otherwise cost you and your staff roughly 23% combined.
Can my accountant help with daily takings reconciliation?
Yes — modern setups link the till (Square, Lightspeed, Zettle…) and delivery platforms into the bookkeeping software so every day's takings match banking automatically. Ask for weekly flash reports: sales, food cost, labour percentage.
Is a café better as a sole trader or limited company?
Once premises, staff, and borrowing are involved, most operators incorporate for liability protection alone — the tax comparison depends on profits. Get it modelled before signing a lease, not after.
Information only — not tax, accountancy, or financial advice. Rules and thresholds change; confirm current positions with GOV.UK or a qualified accountant. Last reviewed: 2026-07-09.