UK Hospitality Chart of Accounts for Xero with VAT Codes (Free)

Running a kitchen, bar, or cafe means most of your money moves through food, drink, and people, and UK VAT treats each of those differently. A generic chart of accounts blurs them into one or two lines and loses the detail that makes a VAT return defensible. This is a UK hospitality chart of accounts built for Xero, with the food, drink, and entertaining accounts each carrying the correct Xero tax rate. It ships as a readable reference CSV and a ready-to-import CSV that arrives already coded.

Food and drink are not the same VAT

The single most useful split in this chart is between food stock and drinks and alcohol stock. When you buy raw and cold food, most of it is zero-rated, so the input VAT you can reclaim is small or nil. Alcohol and soft drinks, by contrast, are standard-rated, so the reclaim is real. A combined purchases account hides that distinction and produces a blended figure that is wrong both ways. In Xero the food account defaults to Zero Rated Expenses with 20% (VAT on Expenses) as the listed alternative, and the drinks account defaults to standard.

On the sales side, the chart adds a food and beverage sales account coded to 20% (VAT on Income), because food served on the premises or sold as hot takeaway is standard-rated, even where the same item would be zero-rated on a shop shelf. That catch is one of the most common hospitality VAT errors, and giving it a dedicated coded account makes it visible.

The entertaining line that is not deductible

Hospitality businesses entertain, and the VAT on it is treated harshly. The chart keeps client entertainment as its own account coded No VAT, because input VAT on entertaining non-employees is blocked and the cost is not deductible against profits. Sitting next to it is staff welfare and events at standard 20%, since VAT on staff parties and team meals is recoverable. The two look similar on a receipt and are opposite in tax treatment, so they need separate accounts rather than one “entertaining” catch-all.

Capital kitchen kit, not a running cost

A new oven or walk-in fridge is capital, so the chart routes it to a kitchen and bar equipment fixed-asset account rather than an expense. Most such equipment qualifies for the Annual Investment Allowance, which is a capital-allowances matter handled at the year end, not a line you expense in full. Keeping it in fixed assets is what lets that relief be claimed cleanly.

How the account code behaves in Xero

The VAT code on each account is a default, not a rule. Xero sets the rate on a transaction line by priority: the contact’s default first, then the inventory item, then the account, and you can override any line by hand. So the food account prefilling zero-rated is a sensible starting point that you change for the standard-rated items, which is exactly why the readable CSV lists allowed alternatives beside each default.

How to use it

1. Open the reference CSV and adapt the account names to your venue, keeping the VAT defaults on food, drink, and entertaining.
2. In Xero go to Accounting, then Chart of accounts, then Import, and upload the CSV into a demo organisation first.
3. Confirm the standard, zero, and exempt rates exist in your org before importing for real.
4. Brief whoever codes the daily supplier invoices on why food and drink sit in different accounts.

The recurring work is keeping a heavy flow of produce, drink, and repair invoices coded correctly:

• Hubdoc fetches recurring supplier bills into the file.
• ExpenseFlow reads each receipt and supplier invoice, applies the right VAT treatment for the line including the entertaining block, and posts it into Xero against the correct account, so a busy week of deliveries stays coded.
• Dext applies supplier rules for repeat wholesalers.

For the wider rules on entertaining, the staff-party threshold, and food VAT, see the UK hospitality expenses guide. On QuickBooks instead? See the UK hospitality chart of accounts for QuickBooks. For the codes themselves, see the UK VAT codes in Xero reference.