VAT Changes for Event Catering Companies: How to Prepare for 2026 Pricing, Compliance, and Digital Reporting

Event catering companies operate with tight margins, complex pricing structures, and seasonal income. Small VAT changes can quickly affect profitability and cash flow.

From April 2026, UK tax and reporting rules will change in ways that directly affect many event catering businesses. Digital reporting obligations will expand, and VAT exposure will require closer monitoring. Any future changes to VAT thresholds would also have a direct impact on when businesses must register.

This article explains what the VAT changes for event catering companies will mean in 2026, how they affect pricing, compliance, and reporting, and what practical steps businesses should take now to stay in control.

What is changing in 2026?

Lower VAT registration threshold

• Currently, the UK VAT registration threshold is £90,000 of taxable turnover over a rolling 12-month period. If you exceed it, you must register for VAT.
• The threshold was increased from £85,000 to £90,000 from 1 April 2024 and is expected to remain at £90,000 at least through 2025/26.
• The most recent Budget did not announce any reduction in the VAT registration threshold from April 2026; any future changes will depend on subsequent Budget decisions.

 Making Tax Digital (MTD) for VAT

• All VAT-registered businesses must already keep digital VAT records and submit VAT returns using Making Tax Digital-compatible software.
• HMRC will automatically register new VAT businesses with MTD for VAT; businesses don’t have to sign up manually.
• VAT records must be maintained digitally using compatible accounting software to meet HMRC requirements.

Expanding MTD for Income Tax (Digital Reporting)

• Making Tax Digital for Income Tax (MTD ITSA) will start to apply to individuals and sole traders from 6 April 2026 if their qualifying income is over £50,000.
• Lower income bands are phased into Making Tax Digital for Income Tax, with the £30,000 threshold applying from April 2027.

VAT Relief for Donations of Goods to Charity

• From 1 April 2026, a new VAT relief will apply to donations of eligible goods to registered charities.
• This relief removes VAT on certain donated goods that are intended for distribution or use by charities.

Changes Affecting Private Hire and Taxi Services

• From 2 January 2026, private hire vehicle and taxi services will no longer be included in the Tour Operators’ Margin Scheme. Instead, 20% VAT must be charged on the full fare where applicable.
  
• This affects suppliers of travel services bundled into event packages.

Electronic Invoicing / Digital Tax Future

• At the time of writing, the UK has not mandated general electronic invoicing (e-invoicing) for all business sectors.
• The government has launched a consultation on standardising e-invoicing across UK businesses and public sector entities.

What these 2026 Changes Mean for Event Catering Companies

For event catering businesses, the 2026 changes increase the importance of early planning and event catering VAT compliance. Turnover spikes from seasonal or one-off events may trigger VAT exposure sooner, while digital reporting rules reduce flexibility to correct errors after submission. Pricing decisions will need to account for VAT more carefully, particularly where private clients cannot reclaim it. Businesses operating as sole traders or with mixed income streams may also face added reporting obligations under Making Tax Digital for event caterers, pushing the sector towards more proactive VAT management and stronger financial controls.

Action Checklist for Event Catering Companies

Event catering companies should take the following steps to prepare properly for 2026 VAT changes:

Track rolling 12-month turnover every month, not just at year end

VAT registration is triggered by exceeding the threshold on a rolling basis, so one busy event season can push turnover over the limit without warning. Monthly monitoring allows businesses to plan pricing and cash flow before registration becomes compulsory.

Review all pricing models to identify where VAT would apply

Catering businesses should determine whether current prices are quoted as VAT-inclusive or VAT-exclusive and assess how VAT registration would affect margins. This is especially important for fixed-price contracts agreed well in advance of events.

Separate private and corporate client pricing strategies

Corporate clients can often reclaim VAT, while private clients cannot. Pricing structures should reflect this difference to avoid losing competitiveness in the private events market or absorbing VAT costs unnecessarily.

Check VAT treatment of bundled supplies carefully

Many event catering contracts include food, drink, staffing, equipment rental, and transport in a single package. Each element must be reviewed to confirm whether it forms a single supply or multiple supplies for VAT purposes, as errors can lead to HMRC assessments. By reviewing pricing models and bundled services, businesses can better understand their event catering VAT compliance obligations and avoid common VAT misclassification errors.

Review transport and logistics arrangements linked to events

Where private hire vehicles or transport services are included in event packages, businesses should assess how the January 2026 VAT changes for private hire services affect pricing and VAT reporting.

Confirm that accounting software is fully Making Tax Digital compliant

Businesses should ensure their bookkeeping systems can maintain digital VAT records, submit VAT returns, and integrate with bank feeds. Relying on spreadsheets or manual records increases compliance risk under MTD rules.

Maintain real-time digital records rather than retrospective updates

Quarterly VAT submissions reduce the scope for correcting errors later. Keeping records up to date after each event improves accuracy and reduces pressure near filing deadlines.

Prepare for Making Tax Digital for Income Tax if operating as a sole trader.

Event catering businesses run by individuals or partnerships should check whether their qualifying income exceeds £50,000, as Making Tax Digital for event caterers will require quarterly income updates starting from April 2026 for businesses that meet this threshold.

Review cash flow forecasts with VAT payment timing in mind

VAT is usually payable quarterly, regardless of whether clients have paid in full. Businesses should factor VAT liabilities into cash flow planning, especially where deposits and staged payments are common.

Consider whether the VAT Cash Accounting Scheme is appropriate

For businesses that receive late payments or rely heavily on deposits, cash accounting can delay VAT payments until cash is received, helping manage cash flow.

Assess eligibility for VAT relief on charitable donations

Where surplus stock or equipment is donated to registered charities, businesses should understand whether the new relief from April 2026 applies and how it should be documented.

Train staff involved in invoicing and event billing

Staff should understand how VAT is applied to invoices, deposits and final balances to avoid inconsistencies that could cause reporting errors.

Schedule regular VAT and compliance reviews

Periodic reviews help identify errors early, confirm correct VAT treatments, and adapt quickly to rule changes.

Seek professional advice before VAT registration or scheme changes

Registering too late, choosing the wrong VAT scheme or misclassifying supplies can create long-term financial issues that are difficult to reverse.

Early and structured preparation reduces the risk of unexpected VAT liabilities, pricing mistakes and compliance penalties.

How Apex Accountants can help Navigate VAT Changes for Event Catering Companies

Apex Accountants provides event catering businesses with practical, sector-focused advice on VAT, digital compliance and pricing decisions.

We help with:

• VAT registration and ongoing compliance, including correct VAT treatment of catering services and bundled event supplies.
• Bookkeeping and digital record-keeping, keeping VAT and event income records accurate and up to date.
• Cloud accounting and Making Tax Digital support, helping businesses meet HMRC digital reporting requirements with confidence.
• Tax planning and cash flow forecasting, supporting better pricing decisions and VAT payment planning.

Our team works closely with event catering businesses to reduce compliance risk and support informed decisions. Contact us today for tailored advice.