Ghost kitchens, dark kitchens and cloud kitchens. A specialist accounting playbook.

A ghost kitchen (also called a dark kitchen, cloud kitchen, virtual kitchen or delivery-only kitchen) is a commercial cooking facility that produces food exclusively for delivery and takeaway, with no dine-in space and no walk-in customer trade. Customers order through delivery platforms like Deliveroo, Uber Eats and Just Eat, and the kitchen prepares the food for collection by riders. The accounting model is materially different from a traditional restaurant because there is no eat-in revenue (so the eat-in vs takeaway VAT split is simpler), platform commissions typically account for 25% to 35% of every order, multiple virtual brands often operate from a single kitchen requiring revenue allocation, and the cost structure relies heavily on packaging, commission and tight margins rather than premises and front-of-house labour.

Yes, if your gross turnover exceeds £90,000 in any rolling 12-month period (the VAT registration threshold since 1 April 2024). For ghost kitchens this is critical because gross turnover is the FULL order value charged to the customer, not the net amount Deliveroo or Uber Eats deposits in your bank after commission. Most ghost kitchen operators tracking their bank deposits underestimate their true gross turnover by 25% to 35%. A £75,000 bank deposit total can easily represent £100,000+ in gross sales, putting you well over the threshold. Specialist help with proper gross-revenue tracking is essential to avoid late VAT registration penalties.

For VAT-registered ghost kitchens, the rules are slightly simpler than traditional restaurants because there is no eat-in revenue. Hot takeaway food is standard-rated at 20% VAT. Cold takeaway food (sandwiches, salads, desserts) is generally zero-rated. Drinks (other than basic milk, tea and coffee) are standard-rated. Where multiple virtual brands operate from one kitchen, you may need to track the VAT mix per brand because each brand may have a different hot/cold ratio. Platform commissions attract 20% VAT which can be reclaimed if you are VAT-registered, recovering thousands of pounds per year. The Flat Rate Scheme is generally NOT advantageous for ghost kitchens because it does not let you reclaim commission VAT separately.

Multi-brand ghost kitchen operations need careful revenue allocation. Each virtual brand is typically a separate menu and brand identity on the delivery platforms (for example, one operator might run a burger brand, a wings brand and a healthy bowls brand from the same kitchen). For accounting purposes, you should track gross revenue per brand, allocate shared costs (kitchen rent, utilities, head chef salary) using a defensible allocation method (typically by revenue share), separate platform commission per brand for VAT recovery, and produce per-brand profitability so you know which brands actually make money once all costs are loaded in. Most operators are surprised to learn that one or two brands carry the others. LOYALS sets this up as part of the bookkeeping framework from the start.

Ghost kitchens typically have heavy upfront capital expenditure on kitchen equipment and fit-out, which qualifies for the Annual Investment Allowance (AIA) at 100% relief up to £1 million per year. Qualifying items include commercial ovens, fryers, grills, refrigeration units, walk-in cold rooms, dishwashers, extraction systems, EPOS hardware, packaging stations, shelving, prep tables, and HVAC systems. The building structure itself does not qualify, but most of the plant and machinery elements of a kitchen fit-out do. For a typical £40,000 to £80,000 ghost kitchen fit-out, the full amount can usually be written off in the year of purchase, generating immediate Corporation Tax relief of £7,600 to £15,200 (at 19%) or £10,000 to £20,000 (at 25% main rate).

Yes. Under section 57 of the Income Tax (Trading and Other Income) Act 2005 (and the equivalent for companies in CTA 2009), pre-trading expenses incurred up to 7 years before your ghost kitchen starts trading can be claimed as if they were incurred on the first day of trading. For ghost kitchens this is particularly valuable because the pre-trading period is often substantial: equipment purchases, kitchen fit-out, food safety registrations, brand development, recipe testing, photography for delivery platform listings, marketing setup costs, and rent during the fit-out period are all qualifying. New ghost kitchen operators almost always miss material deductions in their first year of accounts by failing to claim these properly.

MTD for Income Tax Phase 1 went LIVE on 6 April 2026 for sole traders and landlords with combined gross income above £50,000. Many ghost kitchen operators are sole traders and cross this threshold the moment platform sales are recorded properly at gross value (not net of commission). If your gross turnover exceeds £50,000 you must now keep digital records in MTD-compatible software and submit four quarterly updates plus a final declaration each year. First quarterly deadline (Q1 covering 6 April to 5 July 2026) was 7 August 2026. Phase 2 brings the threshold down to £30,000 from April 2027, which captures most active ghost kitchen sole traders. Limited company ghost kitchens are not affected by MTD ITSA but still need MTD for VAT compliance if VAT-registered. See our deep MTD ITSA guide.

It depends on profit levels, growth plans and whether you have a spouse or partner. After the April 2025 Employer NIC increase to 15% above £5,000 and the dividend allowance cut to £500, single-director limited companies extracting all profit are not as automatically tax-efficient as they once were. Sole trader is competitive for ghost kitchens with profit between £30K and £100K and a single owner. Limited company structure tends to win where you have a spouse who can be a 50% shareholder (splitting dividends across two Personal Allowances), where you want to retain profits in the business at 19% Corporation Tax instead of extracting at 40% personal tax, or where you need limited liability protection from supplier credit and equipment lease commitments. Use our Sole Trader vs Ltd Calculator to model your specific position.

Ghost kitchens must maintain comprehensive daily records: platform statements from Deliveroo, Uber Eats and Just Eat (downloaded monthly from each merchant portal), bank statements showing platform deposits, VAT invoices for commission fees, refund records, packaging supplier invoices, food and ingredient purchase invoices, kitchen rent and utility bills, payroll records, and EPOS daily exports if you use one. VAT-registered businesses must retain records for 6 years. Sole traders must keep Self Assessment records for 5 years after the 31 January submission deadline. With MTD ITSA Phase 1 LIVE, digital record-keeping in MTD-compatible software is mandatory for sole traders above £50K gross income. The DAC7 cross-referencing regime means HMRC already has your gross sales data on file, so accurate matching records are no longer optional.

LOYALS Premium Accounting starts at £150/month plus VAT for single-brand single-kitchen operations and includes monthly platform reconciliation across Deliveroo, Uber Eats and Just Eat, mixed-rate VAT returns, commission VAT recovery, payroll, annual accounts and ongoing HMRC support. Multi-brand operations typically need Business Mentor at £250/month plus VAT, which adds dedicated strategic support and per-brand profitability reporting. Multi-kitchen or franchise operations need the Business Growth Programme at £2,000/month plus VAT. All packages include WhatsApp support and Mon to Sat 10am to 7pm availability. New ghost kitchens often start with a £1,200 Tax Planning Workshop before launch to model the full tax position including pre-trading expenses and capital allowances. See full pricing guide.

The five most common and expensive mistakes we see are: tracking net bank deposits instead of gross order value (causes late VAT registration and DAC7 mismatches), missing commission VAT recovery (leaves £5K to £15K per year on the table for VAT-registered operators), incorrectly using the Flat Rate Scheme (which prevents commission VAT recovery), failing to allocate revenue per virtual brand (leading to opaque profitability and bad strategic decisions), and missing pre-trading expenses for new launches (typically several thousand pounds of unclaimed deductions in year one). All five are preventable with proper specialist setup at the start.