MTD for Cafés, Takeaways & Restaurants —
Takings, Delivery Apps and Your Threshold
Use sales before food cost, wages, rent and commission. If you are VAT-registered, leave out the VAT you collect.
- Your threshold is tested on turnover (total takings), not profit. A café making £15,000 profit on £68,000 of sales is in MTD.
- Delivery apps: record the full order value as income and the platform’s commission as an expense, because the payout you receive is already net.
- MTD for Income Tax applies to sole traders. A café run by a limited company or a husband-and-wife partnership is outside it for now.
For a café, takeaway or restaurant, the number that decides whether you are in Making Tax Digital is your total takings, not your profit. Food and staff costs are high in this trade, so a business with £68,000 of sales and a thin profit is still over the £50,000 line. This guide covers cash and card takings, delivery apps, VAT, and the daily habits that make quarterly updates easy.
Are Café, Takeaway and Restaurant Owners in MTD?
Yes, if you are a sole trader and your gross takings (plus any property or other self-employed income) go over the threshold for the relevant tax year. The first line was £50,000, tested on your 2024–25 return:
| Tax Year Tested | Gross Income Over | MTD Start Date |
|---|---|---|
| 2024–25 | £50,000 | 6 April 2026. Live now |
| 2025–26 | £30,000 | 6 April 2027 |
| 2026–27 | £20,000 | 6 April 2028 |
Two structures sit outside Making Tax Digital for Income Tax at the moment. A limited company is not covered, and a partnership, including a husband-and-wife business registered as one, is not covered either. If you are unsure which you are, check how your last tax return was filed, and see the partnerships guide and sole trader vs limited company.
What Counts as Takings
| Income | Counts towards the threshold? |
|---|---|
| Till sales paid in cash and by card | Yes |
| Delivery app sales (Deliveroo, Uber Eats, Just Eat), full order value | Yes |
| Catering, events and bulk orders | Yes |
| Service charge you keep or distribute | Yes |
| Rental income from a flat above the premises | Yes, added to the total |
| VAT you charge and pay on to HMRC | No |
| Tips that belong to staff and are passed on | Handled under separate rules |
Tip handling depends on how tips are collected and shared, so ask your accountant if you operate a tronc or pay tips through payroll. Do not guess: it is easy to inflate or understate the figure.
Delivery Apps: Full Order Value, Not the Payout
The platform statement usually shows the full order value, the commission or marketing fee, and any adjustments. Record the full value as sales and the commission as a cost. That gives the correct turnover for the MTD test and the correct profit for your tax.
Set the apps up as their own income category in your software so the monthly statement is a one-line reconciliation. Cash and card takings come in daily, and app money arrives weekly, so a single bank feed will not show the real picture.
Daily Takings, Z-Reads and Stock Records
The best record for a till business is the end-of-day Z-read, because it shows what was sold, how it was paid and the VAT split. Post it daily or weekly, and match the card settlements and cash banked to it.
- Keep each Z-read, or a summary entered in your software, for every trading day.
- Record cash paid out of the till for supplies as an expense with a receipt, not as a reduction of takings.
- Log supplier invoices for food, drink and packaging the day they arrive.
- Keep payroll, rent, rates, utilities and licensing costs in their own categories.
| Cost | Notes |
|---|---|
| Food, drink and packaging | Record on the invoice date, or when paid on cash basis |
| Staff wages and employer costs | Paid through payroll; your own drawings are not an expense |
| Rent, business rates and utilities | Premises costs for the café or kitchen |
| Delivery app commission | Expense alongside the full order value recorded as sales |
| Equipment and fit-out | Ovens, fridges and furniture are usually capital allowances |
| Licences, insurance and card fees | Premises licence, food hygiene, public liability, terminal fees |
VAT, Quarterly Updates and Deadlines
If your turnover goes over £90,000 you must register for VAT, and VAT-registered businesses already use Making Tax Digital for VAT. Income Tax MTD is separate, is tested on your income excluding the VAT you charge, and has its own quarterly updates.
| Update | Period (standard) | Deadline | 2026–27 |
|---|---|---|---|
| Q1 | 6 Apr – 5 Jul 2026 | 7 Aug 2026 | No points if late |
| Q2 | 6 Jul – 5 Oct 2026 | 7 Nov 2026 | No points if late |
| Q3 | 6 Oct 2026 – 5 Jan 2027 | 7 Feb 2027 | No points if late |
| Q4 | 6 Jan – 5 Apr 2027 | 7 May 2027 | No points if late |
You will not collect points for a late quarterly update in 2026–27, but the points system starts on 6 April 2027 (four points means £200). HMRC began signing up customers who should already be in MTD in September 2026, so registering yourself is the better route. See the registration guide and the software comparison.
Worked Example
Amir’s neighbourhood takeaway, run as a sole trader
Amir’s profit after food, wages, rent and commission is only about £14,000, but his threshold figure is the £68,600 of gross sales. He has been in MTD since April 2026, and his £3,900 of commission reduces his profit, not his threshold.
Frequently Asked Questions
Do takeaway and café owners have to use Making Tax Digital?
If you are a sole trader and your gross takings were over £50,000 in 2024–25, yes, from 6 April 2026. Over £30,000 in 2025–26 means April 2027, and over £20,000 in 2026–27 means April 2028.
Is the threshold based on profit or takings?
Takings, meaning turnover before costs. Food, wages, rent and delivery commission are expenses and do not reduce the figure tested against the threshold.
How do I record Deliveroo, Uber Eats or Just Eat sales?
Record the full order value as income and the platform commission as an expense. The payout you receive is already net of commission, so recording only the payout understates your sales.
We run the café as a husband-and-wife partnership. Are we in MTD?
Not at present. Partnerships are not yet in Making Tax Digital for Income Tax. Any separate self-employed or rental income either partner has in their own name still counts.
Do I count VAT in my takings?
No. If you are VAT-registered, the VAT you collect is not your income. Use your sales figure excluding VAT for the Income Tax MTD test.
Can I still record cash takings by hand?
You can keep paper takings sheets for your own use, but the figures must be recorded digitally and sent from compatible software. Most cafés post their Z-read daily or weekly.
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