What it costs to run a restaurant in the UK and in Spain in 2026

The tax and labour rules differ more than the headline numbers suggest: Spain charges 10% VAT on restaurant meals but loads employer contributions at around 30%, while the UK charges 20% VAT and a 15% employer NI. Here is what can be compared fairly, and what cannot.

By Tom Beckett

Growth

Monday, 6 July 2026 5 min read

Overhead illustration of a table split into a grey, rainy half and a warm, sunlit half, with a stack of coins and a blank receipt on each side and a cup of coffee in the middle

“Which country is cheaper to run a restaurant in?” is a question that sounds simple and is not. Rent, food and energy are priced by local markets and no official source compares them like for like. What you can compare properly is the part set by law: VAT, wage floors, employer contributions and property taxes. That is what this piece sticks to, and where a number is not comparable, it says so.

VAT: the biggest difference on the receipt

In the UK, food and drink served in a restaurant is standard-rated. HMRC’s catering guidance says you must always charge VAT at the standard rate on food and drink consumed on the premises, and the standard rate is 20%. A temporary reduced rate applies to certain children’s meals from 25 June 2026 to 1 September 2026, but that is the exception.

In Spain, the Agencia Tributaria’s VAT manual lists restaurant services and the supply of food and drink for consumption on the spot at the 10% reduced rate, against a general rate of 21%.

Ten points of VAT on a menu price is a large gap. A €30 meal carries €2.73 of VAT in Spain (10% included in the price), while a £30 meal carries £5.00 in the UK (20% included). UKHospitality is campaigning for the UK rate to come down to 10%, which tells you how the sector sees the comparison.

Employer on-costs: the gap runs the other way

Here Spain is the heavy one. For the general scheme in 2026, the Seguridad Social’s rate table shows the employer paying 23.60% for common contingencies, 0.75% for the intergenerational equity mechanism, 0.20% for FOGASA and 0.60% for training. The BOE order that sets the 2026 rates adds unemployment at 5.5% for the employer on an open-ended contract (6.7% on a fixed-term one), and an accident-at-work premium that varies by activity. On an open-ended contract that is 30.65% before the accident premium.

In the UK, employer National Insurance is 15% on earnings above the £5,000 secondary threshold from April 2026, and nothing below it.

A worked example, with the caveat that the two jobs are not identical:

UK: a worker on the National Living Wage of £12.71, 30 hours a week for 52 weeks, earns £19,827.60. Employer NI is 15% of the amount over £5,000, so £2,224.14, or about 11% on top of pay.
Spain: the minimum wage for 2026 is €1,221 a month in 14 payments, €17,094 a year for full-time work. At 30.65% the employer contribution is roughly €5,240 on an open-ended contract, before the accident premium.

The Spanish figure is on a full-time wage floor and the UK one on 30 hours, so do not read the euro and pound totals against each other. The useful comparison is the percentage on top of pay: roughly 11% in the UK against about 31% in Spain. The UK threshold also helps part-timers more than full-timers, which is exactly the point UKHospitality makes when it argues the lower threshold hits part-time and young workers hardest.

Wage floors and who pays more

The UK’s wage floor is hourly and rises with age: £12.71 for those aged 21 and over, £10.85 for 18 to 20, £8.00 under 18 and for apprentices. Spain sets a national minimum wage (SMI) by decree each year, and many hospitality workers are paid above it under collective agreements, which this piece does not try to cover.

On the whole-economy level, Eurostat estimates hourly labour cost in Spain at €26.40 in 2025 against €34.90 for the EU average. The UK does not appear in that table, and these are whole-economy figures, not hospitality, so they say Spain is a lower-wage economy than the EU average, not that a Spanish kitchen is cheaper than a British one by any particular amount.

For the UK sector itself, the ICAEW’s hospitality profile puts median full-time hourly pay in hospitality at £14.04 in 2025, against £19.67 across the economy, and says 24.6% of hospitality jobs were covered by the minimum wage. UKHospitality estimated that the April 2026 wage rises alone add £1.4bn to sector costs.

Property taxes: England only

In England, rates for hospitality moved in April 2026. Retail, hospitality and leisure properties under £500,000 rateable value now use lower multipliers (38.2p for under £51,000, 43p above that, according to UKHospitality’s summary), but the same revaluation reset rateable values to 2024 rents. Pubs and live music venues also get a 15% relief in 2026/27. Whether your bill went up or down depends on the rateable value of your own unit.

I have not found a source that sets a Spanish occupier’s local property taxes against this in a fair way, so there is no comparison here.

What we could not compare

Three things are missing on purpose:

Rent. No official source compares restaurant rents across the two countries on the same basis, and a rent depends on city, street and lease type more than on country.
Food and energy. Both are market-priced, and both change month to month. They get their own treatment in separate pieces.
Total cost of employment. Spanish collective agreements, UK pay above the minimum and the sector’s use of tips and service charges all change the real wage bill.

What the numbers add up to

If you want one sentence: a Spanish restaurant collects less VAT per meal but pays a much higher percentage on top of every wage, while a UK restaurant collects more VAT and pays a lower on-cost that its part-time staff barely trigger. Neither is simply cheaper. Which is better for your own venue depends on the share of your revenue that goes on wages and what your menu prices have to absorb, which is why we would start from your own payroll and VAT return rather than any country average.