SimpleReturns

Company tax returns for cafés and food businesses

Reviewed by Lee Jones, Founder · Updated 16 July 2026
The short answer

Running a café does not change the filing duty, it changes the ingredients. Every UK limited company sends HMRC a Company Tax Return and Companies House a set of accounts each year, even in a year with no profit. Your version is built from things you already have: the daily takings from the till and the card machine, what you spent on food, staff, equipment and the building, and one honest count of the stock on your shelves at the year end. The one part of food-business tax that genuinely deserves a professional is VAT, and we say so plainly below.

Official source. This guide is a plain-English summary of official GOV.UK guidance, not advice. The authoritative source is Company Tax Returns on gov.uk. Always rely on that over our summary.

What counts as your café's income?

Every pound a customer pays your company counts, however it arrives. Card takings, cash in the till, contactless, and sales through delivery apps all go in. HMRC expects your company to keep a record of all money received and spent, so till summaries and card-machine statements are worth hanging on to.

Two café-specific points:

  • Cash counts the same as card. A quiet £40 of cash sales is income just like £40 through the card machine. The record-keeping duty covers all money received, not just the traceable kind.
  • Delivery apps. Sales through an app count as income, and the cut the app takes is a cost of making those sales. You do not net them off in your head; the app's own statements show both sides.

And yes, you still file in a bad year. A loss, or a year with no Corporation Tax to pay, does not switch the duty off.

What can your café claim?

One rule sits behind every expense: the cost has to be wholly for the business. For a café or food business, that typically means:

  • Ingredients and stock. Coffee, milk, flour, meat, packaging, napkins: things you buy to sell on, or to make the things you sell, are business costs.
  • Wastage. Food you bought but had to bin does not need a special claim. You paid for it as a business cost and no sale came back, so your profit figure already reflects the loss. Just keep buying records as normal.
  • Equipment. The espresso machine, fridges, ovens, dishwasher, tables and chairs. Most equipment like this qualifies for a full deduction in the year you buy it, up to a limit far beyond any café's spending (£1 million a year).
  • The building. Rent, business rates, heating, lighting and water for your premises are running costs.
  • Staff. Wages and salaries are an allowable cost for the company. One honest line here: paying staff runs through payroll, which is HMRC's separate system with its own reporting every payday. Your Company Tax Return picks up the wage totals, but it does not replace payroll, and this guide does not cover it.
  • Insurance and bank charges. Cover for the premises and the business, and the fees your bank and card provider charge, are financial costs of trading.
  • Food hygiene and licences. Registering as a food business with your local council is a legal must, at least 28 days before you start trading. Recurring licence fees your café pays to keep trading, like an annual pavement or alcohol licence renewal, are part of the normal cost of running it, as long as they are wholly for the business. A large one-off licence when you first open can be treated differently, so check a big first-time licence cost with an accountant.

The year-end stock count

This is the one job food businesses have that most other small companies do not. Your company's records must show the stock it owns at the end of its financial year, and the stocktaking you used to work that figure out.

In plain terms: on or close to the last day of your company year, count what is on the shelves, in the fridges and in the freezer, at what it cost you to buy. It does not need to be fancy, a dated list with cost prices is a stocktaking. Our year-end questions ask you for exactly this figure, in plain English, so it never catches you out.

The trap: VAT on food is famously fiddly

Here is the honest warning for this trade. HMRC has an entire notice just on catering and takeaway food, where cold takeaway food is usually zero-rated (no VAT added) but hot takeaway food that meets certain tests is standard-rated (VAT added at 20%), which is exactly why food VAT has the reputation it does. We are not going to explain those rules here, because condensing them is how people get them wrong.

What you need to know is simpler. VAT registration becomes compulsory once your taxable turnover for the last 12 months goes over £90,000, or you expect your turnover in the next 30 days alone to go over £90,000. If your café is near that line, or already over it, get an accountant or VAT specialist for the VAT side. That is not a sales line; VAT returns are a separate filing from the Company Tax Return, and we do not file them. This guide, and our product, cover the Company Tax Return and the annual accounts.

What does filing look like with SimpleReturns?

For most small cafés and food businesses, the filing itself is the easy part. You upload your business bank statement, answer a few plain-English questions (including that year-end stock count), and review every figure before anything is sent. We turn it into the accounts for Companies House and the tax return for HMRC, and filing both costs £99, one price, both filings. It is free to start, no card needed.

One deadline to respect: the return is due 12 months after the end of the accounting period it covers, and a late return costs £200 from the very first day. Put the date somewhere you will see it, then get back to the counter.

Common questions

Does my café still file if it made a loss?

Yes. Every company that gets a notice to deliver a Company Tax Return must file one, even in a year with a loss or no Corporation Tax to pay. The duty does not switch off in a bad year.

Do cash sales count as income?

Yes. Cash in the till counts exactly like card takings and contactless. HMRC expects a record of all money your company receives, not just the traceable kind, so hang on to your till summaries.

Do I have to count my stock at the year end?

Yes. Your company's records must show the stock it owns at the end of its financial year and the count you used to work that figure out. On or near your last day, list what is on the shelves, in the fridges and in the freezer at what it cost you.

Can my café claim for food it had to throw away?

There is no special claim for wastage. You paid for the food as a business cost and no sale came back, so your profit already reflects the loss. Just keep your buying records as normal.

When do I need to register for VAT?

VAT registration becomes compulsory once your taxable turnover for the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days alone. Food VAT is fiddly, so near that line get an accountant or VAT specialist.

Want your café's return filed for you?

You upload your business bank statement, answer a few plain-English questions including that year-end stock count, and review every figure before anything is sent. We build your accounts for Companies House and your CT600 for HMRC, and filing both costs £99, one price for both filings. Free to start, no card needed.

Start your return

And if VAT is your worry, that part genuinely belongs with an accountant or VAT specialist, and we tell you that plainly rather than pretend otherwise.

General guidance, not advice. This guide explains how the rules generally work for small UK limited companies. It isn't tax advice for your specific situation, if you're unsure, check with us or an accountant.