Value-Added Tax on Toast's Card Processing Fees FAQ

Last updated: Apr 8, 2026, 10:17 AM

Toast’s provision of payment processing services in the U.K. is now subject to value-added tax (VAT) at the standard rate.

Toast’s provision of payment processing services in the U.K. and Ireland is now subject to value-added tax (VAT). In order for Toast to be compliant with this tax requirement, Toast is required to withhold the VAT.

Read ahead for answers to questions you may have about this.

In this Article:

 

Frequently Asked Questions

Do I need to take any action?

No; starting 1st August 2024, VAT will automatically be charged at the same time your card processing fees are deducted, and will be reflected in your monthly card processing and deposit reports.

 

Is VAT now applicable on card processing fees?

As part of Toast's periodic VAT compliance review in the U.K. and Ireland, due to frequent updates to tax legislation and further clarifications from tax authorities, it was determined that provision of card processing services is subject to Value-Added Tax (VAT).
 

So what exactly is changing?

Starting 1st August 2024, Toast's card processing fees, including transaction fees, will be subject to VAT at the standard rate currently of 20% for customers in the UK and 23% for customers in Ireland. This means that VAT will be applied to these fees. 
 

Why is 1st August 2024 set as the date for this change?

Toast's VAT liabilities determination is subject to change. As part of our recent periodic tax compliance review, it was determined that VAT should apply to Toast card processing fees. As part of our compliance process, starting on 1st August 2024, we will be able to implement this change.
 

Will I need to adjust my accounting practices as a result of this?

Toast will apply VAT on its card processing fees, alongside other taxable transactions. If you have any questions in relation to your accounting practices please contact a tax advisor or accountant for support.
 

When will this come into effect?

Toast is committed to ensuring compliance with the updated regulations is as streamlined as possible. We have been working on the systems and process changes required to achieve this and Toast will be ready to go live with these changes on 1st August 2024.
 

Can I reclaim this VAT?

Businesses who are registered for VAT can generally reclaim VAT from the relevant tax authorities on eligible business expenses including card processing fees. This information should not be construed or relied upon in any way as legal or tax advice; if you have any questions in relation to your entitlement to reclaim VAT from the relevant tax authorities, please contact a tax advisor or accountant for support.
 

Are other POS providers applying this VAT change?

VAT treatment can vary depending on various factors, including the type of service provided and any exemptions or special rules that may apply. Therefore, it's advisable to review the terms and conditions provided by other POS providers or consult with them directly to confirm the VAT treatment of their card processing fees in the U.K.
 

Do I need to get specialist tax advice?

Toast does not provide any tax advice related to your VAT reporting and compliance. If you have any questions in relation to your compliance with VAT regulations, please contact a tax advisor or accountant.
 

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