When you start a mobile catering business, one of the first real decisions is how to set it up in the eyes of HMRC. It sounds dry, but it affects your tax, your paperwork and how protected your own savings and home are if things go wrong. The good news is that for most caterers starting out the choice is simple. Here is how the options actually stack up for a food trade, in plain English, so you can have a sensible conversation with an accountant rather than be baffled by one.

Sole trader: where most caterers start

Being a sole trader is the simplest way to run your catering business, and it is where the large majority of mobile caterers begin. You and the business are legally the same thing. You register with HMRC for Self Assessment, keep a record of your income and expenses from day one, and once a year you submit a tax return and pay Income Tax and National Insurance on your profits. That is essentially it.

The appeal is low hassle and low cost. There is very little admin, no filing fees, and you can be trading within days of registering. The trade-off is that there is no legal separation between you and the business, so if the business ran up debts your personal assets could in theory be at risk. For a one-van operation with sensible insurance in place, most caterers are comfortable with that, and you can always change structure later as you grow. Register as soon as you start trading; do not leave it.

Partnership: going in with someone else

If you are starting the business with a partner, a husband and wife team or a couple of friends, a partnership is the natural next step. It works much like being a sole trader but shared: each partner registers, and you each pay tax on your share of the profits. It is worth putting a simple written partnership agreement in place that sets out who owns what, who does what, and what happens if one of you wants out. People skip this and regret it. As with a sole trader, a standard partnership offers no liability protection, so the partners are personally responsible for the business debts.

Limited company: more protection, more paperwork

A limited company is different in kind: it exists in its own right, with its finances kept completely separate from yours. You register it with Companies House, it has at least one director, and you become an employee and usually a shareholder of your own company. The big attraction is limited liability: your personal assets such as your home and car are protected, because the company, not you, owes the debts (unless you have given a personal guarantee, for example on a loan).

There can be tax advantages too once you are making a decent, steady profit, because you can pay yourself through a mix of salary and dividends. But it comes with real obligations: annual accounts and a confirmation statement filed with Companies House, a company tax return, and corporation tax on the company’s profits, currently 19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief between the two. Miss a filing deadline and you get an automatic penalty. For most people running a limited company, an accountant is not optional, it is part of the cost of doing it properly.

My honest take after years of this: if you do not clearly need a limited company yet, keep it simple. Start as a sole trader, get trading, and move to a limited company when your profits and your accountant tell you the time is right.

What about VAT?

VAT is separate from your business structure and catches a lot of new caterers out, so it is worth understanding early. You must register for VAT once your taxable turnover passes £90,000 in any rolling 12-month period (the threshold as of June 2026, check gov.uk for the current figure). Below that you can register voluntarily but most small caterers do not. Once registered you charge VAT on your sales, reclaim it on purchases, keep proper records and submit returns to HMRC. Hot takeaway food is generally standard-rated, which is another reason to talk it through with an accountant as you approach the threshold rather than after you cross it.

Tax figures correct as of June 2026 — thresholds and rates change, so check gov.uk for the latest before you decide.

A word on umbrella companies

You may have read about umbrella companies. They are designed for agency contractors who work through someone else’s payroll, so they are not relevant to running your own mobile catering business. You can safely ignore them.

The bottom line

For most caterers the path is: start as a sole trader because it is simple and cheap, consider a partnership if you are going in with someone, and move to a limited company when your profits justify the extra paperwork and protection. None of this is one-size-fits-all, though, and the tax side genuinely matters, so before you decide, have a short conversation with a qualified accountant about your own numbers. It is money well spent, and a good accountant usually saves you more than they cost.

Choosing a structure sits right alongside working out your start-up costs and the licences you need — line all three up before your first trading day.

I run catering businesses, I’m not an accountant, and tax rules change. Treat this as a plain-English starting point, then check the current rules at gov.uk and get advice from a qualified accountant for your own situation.

Step 1 of 12: get set up

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Frequently asked questions

Should a mobile caterer be a sole trader or a limited company?

Most caterers start as a sole trader because it is simple, cheap and quick to set up, with minimal paperwork. A limited company protects your personal assets and can be more tax-efficient once you are making a steady, decent profit, but it brings annual filings and corporation tax. A common path is to start as a sole trader and switch later. Ask an accountant about your own numbers.

Do I need to register my catering business with HMRC?

Yes. If you trade as a sole trader or partnership you register with HMRC for Self Assessment as soon as you start trading. A limited company is registered with Companies House and also files a company tax return. Register early rather than leaving it.

When does my catering business have to register for VAT?

When your taxable turnover passes £90,000 in any rolling 12-month period (the threshold as of June 2026). Below that, VAT registration is optional. Hot takeaway food is generally standard-rated for VAT, so speak to an accountant as you approach the threshold.

What tax does a limited catering company pay?

Corporation tax on its profits, currently 19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief in between (rates as of June 2026). Directors also pay Income Tax and National Insurance on salary, and tax on any dividends. Accounts and returns must be filed on time or automatic penalties apply.

Do I need an accountant to run a mobile catering business?

Not as a simple sole trader, where many people manage their own Self Assessment. For a limited company, or once VAT and payroll come into play, an accountant is strongly recommended and usually saves you more than the fee. At minimum, have one conversation before you choose your structure.

Is an umbrella company suitable for mobile catering?

No. Umbrella companies are for agency contractors paid through someone else’s payroll. They are not relevant to running your own catering business.