Restaurant Tax Deductions UK — Every Expense You Can Claim in 2025/26
Most restaurant owners miss at least 3–5 legitimate tax deductions every year. Here is the complete list — plus the hospitality-specific claims your accountant might not know about.
Every Tax Deduction Available to Restaurant Owners
Expand each category to see every allowable expense. If you are not claiming all of these, you are paying more tax than you need to.
The Five Hospitality Tax Deductions Almost Everyone Misses
These are the deductions we find most frequently when reviewing new hospitality clients' accounts. If your current accountant has not flagged them, you may be overpaying tax.
Capital Allowances on Fit-Out Costs
Many owners spend tens of thousands on kitchen refits and restaurant fit-outs without claiming the Annual Investment Allowance. Up to £1M of qualifying capital expenditure can be written off at 100% in the year of purchase — yet a significant number of hospitality businesses fail to claim this relief properly.
Delivery Platform Commissions Recorded Incorrectly
Deliveroo, Uber Eats, and Just Eat charge significant commissions — often 25–35% of the order value. Many owners net these off against income instead of recording them as separate deductible expenses. This can create inaccuracies in your accounts and affect your VAT position.
Music Licensing Fees
PPL and PRS licence fees are fully deductible business expenses, but they are among the most frequently overlooked deductions in hospitality. If you play background music, show live sport, or host entertainment, these fees are genuine business costs that reduce your taxable profit.
Staff Uniforms and Protective Clothing
Chef whites, branded uniforms, non-slip safety shoes, aprons, and heat-resistant gloves are all deductible. Many owners absorb these costs without recording them as separate claimable expenses, particularly when purchased informally or paid for in cash.
Pre-Trading Expenses
Costs incurred up to 7 years before your restaurant starts trading can be claimed as if they occurred on day one. This includes rent during fit-out, licensing fees, staff training, menu development, and marketing before opening. New restaurant owners almost always miss this, leaving substantial deductions unclaimed.
Expenses You Cannot Claim
Getting this wrong can trigger an HMRC investigation. Here are the most common expense types that are not allowable for tax purposes.
Personal Expenses Mixed with Business
Any expense that has a personal element — such as using your restaurant for a private party — cannot be claimed in full. HMRC expects clear separation between business and personal spending.
Client and Business Entertaining
Unlike many other countries, the UK does not allow tax relief on business entertaining. Taking clients to dinner, hosting launch events, or providing hospitality to suppliers is not deductible for tax purposes.
Everyday Clothing
Clothing that could be worn outside work is not deductible — even if you only wear it at the restaurant. Only branded uniforms, protective clothing, and items that are clearly not suitable for everyday use qualify.
Fines and Penalties
HMRC penalties, parking fines, late licensing fees, and any other fines or penalties cannot be claimed as business expenses. This includes food hygiene improvement notices that result in fines.
Capital Allowances for Restaurant Equipment
Capital allowances are typically the single largest tax saving opportunity for hospitality businesses. Understanding how they work — and the upcoming changes — is essential.
Annual Investment Allowance
The AIA allows you to claim 100% tax relief on qualifying capital expenditure up to £1 million per year. For most restaurants, this covers the full cost of kitchen equipment, EPOS systems, furniture, heating and cooling systems, and fit-out costs in the year they are purchased.
Qualifying items include ovens, fryers, refrigeration units, dishwashers, extraction systems, card terminals, tables, chairs, bar equipment, and commercial lighting.
April 2026 Changes — Plan Now
The Writing Down Allowance rate drops from 18% to 14% for expenditure exceeding the AIA limit. However, a new 40% First-Year Allowance becomes available for unincorporated businesses (sole traders and partnerships).
This means timing matters. If you are planning a major kitchen refit or equipment purchase, the tax treatment differs depending on whether you spend before or after April 2026. Talk to us before making significant capital purchases.
What Qualifies
Kitchen equipment and appliances, EPOS and payment systems, restaurant furniture, heating, ventilation, and air conditioning, commercial refrigeration, extraction and ventilation, signage and external lighting, security systems, and certain elements of interior fit-out.
The building itself and structural work generally do not qualify for AIA — but there are specific reliefs for certain building elements. We assess every project individually.
Why LOYALS Finds Deductions Other Accountants Miss
Generalist accountants handle your books. A specialist restaurant accountant actively looks for money you are leaving on the table.
The range of additional deductions LOYALS typically identifies for hospitality clients switching from generalist accountants. Most of this comes from properly structured capital allowances, correctly recorded platform commissions, and overlooked licence and compliance costs.
Stop Leaving Money on the Table
Book a free tax savings review. We will look at your last return, identify missed deductions, and show you exactly how much you could save with specialist hospitality accounting.
Available evenings and weekends — because your tax savings should not wait for office hours.
Real Savings for Real Hospitality Businesses
"LOYALS found £7,200 in deductions my previous accountant had missed — including capital allowances on a kitchen refit I did two years ago that was never claimed. They amended the return and the refund came through within weeks."
"I had no idea our Deliveroo commissions should be recorded differently. LOYALS restructured our expense tracking and found savings across delivery fees, music licences, and staff uniform costs that I had been absorbing personally for years."
Your Restaurant Tax Deduction Questions Answered
Restaurant owners can claim a wide range of business expenses including food and drink purchased for resale, staff wages, uniforms and training, premises costs such as rent and utilities, kitchen equipment through capital allowances, technology and software subscriptions, marketing costs, professional fees, licences (premises, music, TV), transport costs, and finance charges. The key requirement is that expenses must be incurred wholly and exclusively for business purposes. A specialist hospitality accountant can typically identify 3–5 additional deductions that generalist accountants miss.
Refurbishment costs are treated differently depending on whether they are repairs or improvements. Like-for-like repairs — replacing a broken oven with a similar one, repainting walls, fixing plumbing — are fully deductible as revenue expenses in the year they occur. Improvements and new installations are capital expenditure and qualify for capital allowances. Under the Annual Investment Allowance, you can claim 100% tax relief on qualifying capital expenditure up to £1 million in the year of purchase, covering kitchen equipment, EPOS systems, furniture, HVAC, and certain fit-out costs.
Yes, absolutely. Commissions charged by Deliveroo, Uber Eats, Just Eat, and other delivery platforms are fully deductible business expenses. However, they should be recorded as a separate expense line rather than netted off against income. Netting off is a common mistake that can create inaccuracies in your accounts and may result in incorrect VAT treatment. Proper recording of platform commissions is important for accurate financial reporting and ensures you claim the full deduction.
Staff meals can be deductible provided certain conditions are met. The meals must be available to all staff on a consistent basis under a formal policy — not just provided to selected individuals. The cost must be reasonable relative to your operation, and the provision must be primarily for business purposes such as keeping staff on-site during service. If these conditions are met, the cost of food used for staff meals is an allowable business expense. HMRC may challenge staff meal deductions if the policy appears selective or costs seem excessive.
The Annual Investment Allowance allows restaurants to claim 100% tax relief on qualifying capital expenditure up to £1 million per year. This covers kitchen equipment, EPOS systems and terminals, restaurant furniture, heating and cooling systems, extraction and ventilation, commercial refrigeration, and other plant and machinery. From April 2026, the Writing Down Allowance rate for expenditure exceeding the AIA drops from 18% to 14%, so timing of major purchases becomes more important. A new 40% First-Year Allowance will be available for unincorporated businesses.
Yes. Pre-trading expenses incurred up to 7 years before your restaurant starts trading can be claimed as if they were incurred on the first day of trading. This includes rent paid during the fit-out period, professional fees for licensing and planning applications, staff training and recruitment before opening, menu development and testing, marketing and launch costs, and other qualifying expenditure. This is one of the most commonly missed deductions for new restaurant owners — the amounts involved can be substantial.
Yes. PPL and PRS music licence fees are fully deductible business expenses for any hospitality venue that plays music. TV licensing fees for showing sport or entertainment are also deductible. These are among the most frequently overlooked deductions in hospitality because many owners simply forget to include them or do not realise they qualify. If you are paying for music licences and not claiming them, you are overpaying tax unnecessarily.
You can amend a self-assessment tax return up to 12 months after the filing deadline, effectively giving you just under 2 years from the end of the tax year. For overpayment relief claims where you have paid too much tax due to missed deductions, you can go back up to 4 years from the end of the relevant tax year. If your previous accountant consistently missed deductions, it is worth having a specialist review your recent returns. LOYALS offers a free tax savings review for new hospitality clients to identify any recoverable overpayments.
HMRC requires you to keep records of all business income and expenses for at least 6 years. This includes purchase invoices and receipts, bank and credit card statements, payroll records, mileage logs for business travel, contracts and lease agreements, and any supporting documentation for expense claims. Under Making Tax Digital, these records must be maintained digitally in MTD-compatible software from April 2026 for sole traders earning over £50,000. Good record-keeping not only ensures you claim every deduction but also protects you if HMRC opens an enquiry.
LOYALS typically identifies between £2,000 and £12,000 in additional deductions when hospitality clients switch from generalist accountants. The most common areas where savings are found include unclaimed capital allowances on kitchen equipment and fit-outs, incorrectly recorded delivery platform commissions, missed claims for staff uniforms and training, overlooked licence fees such as PPL and PRS, and failure to claim pre-trading expenses for new restaurants. A free tax savings review can identify your specific opportunities with no obligation.