Restaurant Deposit Policy UK: Rules, Amounts and a Template

A fair UK restaurant deposit policy is clear before the guest books, is sized to your real loss if the table goes empty, states when it is refundable, and is applied the same way every time. UK consumer law does not ban deposits or no-show fees. It makes a term unfair if it causes a significant imbalance to the guest's detriment, and a term that demands a disproportionately high sum for cancelling can be regarded as unfair. This guide covers the types of charge, how to size one, the legal tests, VAT, and a template you can copy.

Deposit, card hold, prepayment or no-show fee

These four are often mixed up. Pick one per type of booking.

A no-show fee is not a fifth product but the charge you make under a card guarantee. For the wider tactics around no-shows, see how to reduce restaurant no-shows.

When to apply one, and how much

Charge where the downside is biggest. Typical triggers are a party-size threshold (for example six or more), Friday and Saturday evenings, festive dates, tasting menus and private hire. Midweek lunch for two usually does not need one.

Instead of copying another venue's figure, size the amount from your own loss. A worked example:

An £80 deposit is well below the £196 you would lose, which is easy to defend as proportionate. A deposit equal to the full expected bill for an ordinary Tuesday table is harder to justify. These figures are illustrative, so use your own average spend and margin. The menu price calculator and no-show cost calculator help.

The UK legal basics

Fairness of terms. Under section 62 of the Consumer Rights Act 2015, an unfair term in a consumer contract is not binding on the consumer. A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations to the detriment of the consumer.

The grey list. Schedule 2 lists terms that may be regarded as unfair. Three matter for restaurants: requiring a consumer who decides not to go ahead to pay a disproportionately high sum in compensation (paragraph 5), requiring a consumer who fails to perform to pay a disproportionately high sum (paragraph 6), and letting the trader keep sums paid for services not yet supplied where it is the trader who cancels (paragraph 7). In practice: keep the fee in line with your loss, and refund in full if you cancel.

Transparency. Section 64 says a term about price is only excluded from the fairness test if it is transparent and prominent. A term is transparent if it is in plain, intelligible language and legible, and prominent if it is brought to the average consumer's attention so they would be aware of it. A deposit clause buried in your website footer is the wrong approach.

Drip pricing. Since 6 April 2025 the Digital Markets, Competition and Consumers Act 2024 requires the total price, including any fees the consumer will necessarily incur, to be shown up front (section 230; the regime started on 6 April 2025 under SI 2025/272, and the CMA announced it in force on 7 April 2025). If you charge a mandatory booking fee, show it before the guest commits. A deposit credited against the bill is a part payment, but show its amount and refund terms before payment is taken.

No 14-day cooling-off. Regulation 28(1)(h) of the Consumer Contracts Regulations 2013 excludes catering contracts that give a specific date of performance from the right to cancel, so a booking for a set date is not covered by the usual 14-day withdrawal right. Your own cancellation window is what applies.

A corporate booking by a company is not a consumer contract, but using one set of terms for everyone is simpler and safer.

VAT on deposits

If you are VAT-registered, HMRC's VAT Notice 700 says three things that matter here:

• Most deposits are advance payments and create a tax point when you receive them (paragraph 14.2.3). VAT is due on the amount received, at the rate for the supply, which for restaurant meals is generally the standard rate (see VAT Notice 709/1 on catering).
• If you keep all or part of a payment for something the customer fails to take up, VAT is due on the amount paid, and it cannot be treated as outside the scope of VAT (paragraph 8.13.1).
• If you refund the payment, you can reclaim the VAT you accounted for in your next return.

Worked example: a VAT-registered restaurant keeps an £80 deposit from a no-show. VAT is one sixth of £80, or £13.33, and the net income is £66.67. If you refund it instead, the £13.33 comes back on your next return.

When a deposit is credited against the final bill, treat it as a payment on account so the VAT is not counted twice. HMRC's wording covers payments you retain. A no-show fee charged to a saved card, with no earlier payment, is not spelled out in the same words, so ask your accountant how to book it.

Policy wording you can copy

Replace the square brackets. Put this on the booking page before payment, in the confirmation email and SMS, and on your website.

Deposits and cancellations

Bookings for [6 or more guests], and all bookings on [Fridays, Saturdays and 1 to 24 December], require a deposit of [£10] per guest, taken when you book.

Your deposit is credited against your bill when you dine with us.

Changing or cancelling. You can cancel or change your booking free of charge up to [48 hours] before your booking time, using the link in your confirmation or by calling [phone number]. We will refund your deposit in full within [5 working days].

Late cancellations and no-shows. If you cancel with less than [48 hours] notice, or do not arrive within [15 minutes] of your booking time, we keep your deposit. This reflects the cost to us of an empty table that we could not resell.

If we cancel. If we have to cancel or change your booking, we will refund your deposit in full.

Reducing numbers. If your party is smaller than booked, tell us at least [48 hours] before and we will adjust the deposit.

Questions or a genuine emergency? Call or email [contact details] and we will do our best to help.

For ordinary tables where you save a card, replace the first two paragraphs with: "We hold your card details securely to guarantee your booking. We will not charge your card unless you cancel late or do not arrive, in which case we charge [£10] per guest."

Showing and recording the policy

• Booking page. Show the policy above the pay or confirm button. Ask for a tick-box confirmation.
• Confirmation email and SMS. Repeat the amount, the deadline and a one-tap cancel link.
• Reminder. Send the deadline again 48 hours and 24 hours before.
• Website and Google profile. Keep a short version where guests look before they book.
• Record. Store the date, time, the wording shown and the guest's acceptance with each booking. If a guest disputes a charge with their bank, that record is your evidence.

When a no-show happens, check the booking record, apply the policy as written, and tell the guest what was charged and why. Consider a goodwill refund where there is a real emergency, and apply that discretion fairly. TablePort Reservations sets deposits and cancellation windows per shift and credits the deposit to the check when the guest sits down, so the amount shown at booking is the amount applied at billing.

This is general information, not legal or tax advice. For a specific situation, speak to a solicitor or accountant.