How to start a mobile food business

Mobile food businesses are those that sell food from a vehicle, and it is a popular entrepreneurial activity in the UK. Setting up a mobile food business can be easy and rewarding, with potentially low start-up costs, aside from finding a suitable vehicle. 

Figures from the British Street Food Awards show there are around 10,000 street food traders in the UK, with total annual revenue over £600 million.  

Running a food truck business is often cheaper than setting up a restaurant or cafe, it’s also more flexible and has lower risk. With fewer overhead costs such as rent and heating, mobile food businesses can be highly profitable too. The Nationwide Caterers Association says a typical gross profit margin in the mobile catering industry is between 65 and 85%. 

Like all business ventures, mobile food business owners need to understand their tax and financial obligations, and the industry regulations they need to comply with.  

Food business registration 

You must register your food business with your local authority at least 28 days before you start trading or food operations begin.   

If you will be trading on public streets, you need a street trading licence from your local authority. You also need a separate licence to sell alcohol. 

Food safety and hygiene 

Food safety and hygiene rules you should comply with include: 

• Carry out a risk assessment. 
• Food businesses must be inspected by their local authority. In England, Wales and Northern Ireland, a hygiene score of between one and five is given. Scotland has a different scheme. 
• Anyone handling food must have appropriate supervision and training in food hygiene. Holding a formal food hygiene certificate isn’t compulsory but it is recommended. 
• You must have a process for managing food safety and hygiene using Hazard Analysis and Critical Control Point (HACCP) procedures. 

Find more details on food safety and hygiene rules here. 

Insurance 

Your insurance requirements could include:  

• Employers’ liability insurance: Legally required for businesses employing one or more members of staff.
• Public liability insurance: Covers you if a member of the public suffers injury or property damage as a result of your business’ activities. 
• Product liability insurance: Covers you if someone falls ill after consuming your food. 
• Equipment and stock insurance: covers you for loss or damage to your stock or equipment. 

Self-employment 

One of the most important decisions you need to make when starting a new business is your business structure. The simplest structure is a self-employed sole trader. 

Registering as self-employed with HMRC 

Being a sole trader involves registering for self-assessment by 5th October in the year after the tax year for which you need to submit a tax return. Learn more about how to register for self-assessment here. 

Obligations for sole traders 

Setting up as a sole trader involves a limited amount of paperwork and responsibilities, but you have full liability, so you are responsible for any losses the business makes and you need to submit a self-assessment tax return each year or face a penalty. 

Other business structure options 

If you are running your food business with someone else, you might want to set up as a partnership. This is similar to a sole trader, but the partners share responsibility for the business.  

A limited company is the most complicated structure and has the most responsibilities, but it also has several potential advantages.  

Limited companies are more tax efficient than other structures and unlike sole traders and partnerships, a limited company is legally separate, so you are not personally liable for any liabilities and debts. Trading as a limited company can also open you up to more opportunities to access funding and encourage more trust among suppliers and customers.  

Find more advice on sole traders and limited companies here, and partnerships here. 

Business loans and financing 

You may need funding to operate your food business. Options include: 

• Bank loans and overdrafts 
• The Government’s new Growth Guarantee Scheme or Start Up Loans scheme 
• Grants from organisations like local councils and charities 
• Leasing and hire purchase to fund expensive items like vehicles 

To access most funding, you need a business plan that outlines key details about your venture. Discover our tips on writing a strong and successful business plan here. 

Bookkeeping and accounting 

Keeping track of your finances should be a priority for any business owner. It is essential for understanding the financial health of your business, and helps you track progress against targets and identify cash flow gaps.  

You should monitor the money coming into and going out of your business, as well as knowing if you are making a profit or loss.  

Bookkeeping and accounting software such as QuickBooks, Xero and Dext can help you effectively monitor and manage your finances.  

You can also employ the services of an accountant to look after your bookkeeping, so you can focus on what you do best – running and growing your business. 

VAT registration 

Value Added Tax (VAT) is applied to products and services sold by VAT-registered businesses.  

Threshold for VAT registration 

You must register for VAT if you sell taxable supplies and your taxable turnover for the last 12 months exceeds £90,000, or you expect your turnover to exceed £90,000 in the next 30 days.  

VAT for catering and takeaway food business 

When it comes to catering and selling food there are specific VAT rules and legislation determining whether the sale is standard or zero-rated. Hot takeaway food and drink that meets the tests set out is standard rated for VAT. This means your sales prices should be shown to the public as inclusive of VAT and you may need to increase your prices to accommodate this. 

If you’re selling cold takeaway food and drink, this is generally zero-rated. 

The rules around hot and cold food, whether this is takeaway, and the type of premises you sell from can be complicated, therefore we always advise speaking to your accountant about how you need to charge and pay VAT. 

Steps to register for VAT 

Registering for VAT is simple, and you can register for VAT online, or your accountant can register as your VAT agent and do this for you. 

Once registered, you need to keep appropriate VAT records and ensure your bookkeeping takes into account VAT and submit VAT returns. 

VAT Flat Rate Scheme 

The VAT Flat Rate Scheme is a way to simplify your VAT obligations as it allows you to apply a fixed percentage to your turnover to calculate the tax that is due.  

To be eligible, you must be VAT registered, your VAT taxable turnover in the next year must be under £150,000, and your business must not be ‘associated’ with another. 

The key benefits are that it simplifies your VAT record keeping, and it can help you better manage your cash flow. 

If you are considering using a VAT scheme, speak to an accountant to make sure it’s suitable. 

Get help with your mobile food business   

TaxAssist Accountants can help you with the right advice to support your business.    

We can assist with taxes, accounting, bookkeeping and payroll, as well as connecting you with other providers we work with.   

Contact us to learn more about our services and to book a free initial meeting.   

Last updated: 2nd August 2024