Is there VAT on oat milk? A quick answer for UK cafes
8 November 2026 · 3 minute read
Short answer: no VAT when you buy oat milk, because HMRC treats plant milks as zero-rated. But once it goes into a hot drink, the whole drink carries 20% VAT, oat milk charge included.
| Oat milk in a cafe | VAT |
|---|---|
| Cartons you buy from a supplier or wholesaler | 0% |
| Oat latte, flat white or hot chocolate, eat in or take away | 20% |
| The oat milk extra on a hot drink | 20% |
| Iced oat latte or oat milkshake, taken away | 0% |
| Iced oat latte or oat milkshake, drunk in | 20% |
Buying oat milk: zero-rated
Most drinks you buy for resale, like cans and juice, carry 20% VAT. Plant milks don't. HMRC's VAT food manual says alternative milks made from oats, soya, peas, almonds, coconuts and rice are zero-rated, because they replace dairy milk rather than being a drink in their own right. So a £2.10 carton of barista oat milk costs you £2.10, whether or not you're VAT registered.
Flavoured or sweetened plant drinks, like a chocolate oat drink, aren't spelled out in HMRC's guidance. Your supplier's invoice shows the rate they charge, which is the quickest check.
Selling it in hot drinks: 20%
Hot drinks carry 20% VAT whether they're drunk in or taken away, and the oat milk charge is part of the drink. If you're VAT registered, a 40p oat milk charge leaves you 33p after VAT. That covers oat milk in a flat white, but not always in a large latte. Our guide to charging extra for oat milk works out the charge for each size.
Iced drinks: depends where they're drunk
Cold coffee and milk drinks taken away are zero-rated, so an iced oat latte to go carries no VAT. If the customer drinks it at your tables, it's catering, and 20% applies. Set eat-in and takeaway options on your till for iced drinks, not just for food.
What it means for your margin
- Cost oat milk at the invoice price. There's no VAT on it to take off or reclaim.
- Work out GP on the drink price without VAT: a £3.70 oat latte gives a VAT-registered cafe £3.08.
- Not VAT registered? You don't charge VAT on sales, so you keep the full £3.70, and the oat milk still cost you no VAT.
For every other item on the menu, see the cafe VAT quick table. This is a plain-English summary, not tax advice: an accountant can check anything you're unsure about.