Restaurant no-show deposits in the UK: what you can legally charge

An empty table that was booked is one of the most frustrating losses in hospitality. Research by Zonal and CGA puts the cost of no-shows at £17.6 billion a year in lost sales for UK hospitality, with their 2024 survey of 5,000 consumers showing the no-show rate rising from 12% to 14% over the year. So it is no surprise that more and more UK restaurants ask for a deposit or a card number at the time of booking.

But is it actually legal for a restaurant to keep a deposit, or to charge a customer's card, when a table stays empty? The short answer is yes, with conditions. UK consumer law does not ban deposits or no-show fees; it bans unfair ones. This guide walks through what the Consumer Rights Act 2015 and the Competition and Markets Authority (CMA) actually require, how deposits differ from card holds, what HMRC says about VAT on money you keep, and how to communicate charges so they hold up.

One point before we start: charging for no-shows is the last line of defence, not the first. Most no-shows are prevented upstream, with confirmations, reminders and an easy way to cancel. A restaurant booking system that sends automatic confirmation emails already removes a chunk of the problem before any money changes hands.

Is it legal for a UK restaurant to take deposits or charge no-show fees?

Yes. There is no UK law that prohibits a restaurant from taking a booking deposit, asking for prepayment, or charging a fee when a guest fails to show up. A confirmed booking is a contract: the restaurant agrees to hold a table, and the customer agrees to turn up. When the customer breaks that contract, the restaurant is entitled to protect itself against the loss.

What the law regulates is how you do it. Two things make a deposit or no-show charge unlawful in practice:

1. The term is unfair under the Consumer Rights Act 2015, typically because the amount is disproportionate to your real loss.
2. The term was not properly communicated before the customer booked, so it never became part of the contract at all.

Get those two right and a deposit or no-show fee is perfectly enforceable.

What the Consumer Rights Act 2015 actually says

The fairness rules live in Part 2 of the Consumer Rights Act 2015. Section 62 requires terms in consumer contracts to be fair, and an unfair term is not binding on the consumer. A term is unfair if, contrary to good faith, it causes a significant imbalance in the parties' rights to the detriment of the consumer.

Schedule 2 of the Act contains the so-called grey list of terms that may be regarded as unfair. Two entries are aimed squarely at deposits and cancellation charges:

• Paragraph 5: a term requiring that, where the consumer decides not to conclude or perform the contract, the consumer must pay the trader a disproportionately high sum in compensation or for services which have not been supplied.
• Paragraph 6: a term requiring a consumer who fails to fulfil their obligations to pay a disproportionately high sum in compensation.

The key phrase in both is "disproportionately high sum". The law does not set a maximum deposit or a maximum no-show fee. It sets a principle: what you keep or charge must be proportionate to what you actually lose.

What "proportionate" means for a restaurant

The CMA's business guidance on fair contract terms, published on gov.uk, translates the principle into practice. In summary:

• Any money you keep when a customer cancels must reflect what you actually lose as a result, and must not be excessive.
• A deposit kept in full is more likely to be fair if it is no more than a small percentage of the total price.
• Terms that make prepayments non-refundable regardless of the reason for cancellation are unlikely to be fair.
• You cannot charge for both your costs and your lost profit where that would compensate the same loss twice.
• Your real loss takes mitigation into account: if you resell the table (or could reasonably have resold it, for instance after an early cancellation), your loss shrinks accordingly, and so should what you keep.

In restaurant terms: keeping a £10 or £20 per-head deposit after a Saturday-night no-show at a fully booked venue is easy to defend, because the empty seats are a genuine, unrecoverable loss. Keeping a 100% prepayment after a customer cancelled a week in advance, when the table was rebooked the same evening, is exactly the kind of term paragraph 5 targets.

Timing matters as much as the amount

A no-show on the night and a cancellation ten days out are not the same loss. A fair policy is usually tiered: free cancellation up to a cut-off (24 or 48 hours is common), then a charge that reflects the shrinking chance of reselling the table. A single flat penalty applied identically to both situations is much harder to justify as a genuine pre-estimate of loss. We cover how to structure the tiers, with wording examples, in our guide to writing a restaurant cancellation policy.

Deposit, prepayment or card hold: which mechanism should you use?

"Deposit" gets used loosely, but the three mechanisms behave very differently, both legally and commercially.

For most restaurants, the card hold is the sweet spot: the commitment effect is nearly as strong as a deposit, but the guest pays nothing unless they actually no-show, so honest customers feel trusted rather than taxed. The fairness rules apply identically, since a charge to a stored card is still a sum the consumer must pay under Schedule 2. We explain the mechanics, the psychology and the pitfalls in detail in our article on credit card holds for restaurant reservations.

Whichever mechanism you pick, the same three tests apply: disclosed before booking, proportionate to real loss, and applied consistently.

Do you owe VAT on retained deposits and no-show fees?

Yes, and this catches restaurateurs out. Since 1 March 2019, HMRC's position is that VAT is due on payments customers make for goods or services they then fail to use or collect. The change was announced in Revenue and Customs Brief 13 (2018) and is reflected in HMRC's internal guidance on no-shows and retained payments.

Before that date, a retained deposit could often be treated as compensation outside the scope of VAT, and businesses reclaimed the output tax when a guest failed to appear. HMRC's current view, following EU court rulings, is that the payment is consideration for the customer's right to the service, whether or not the customer exercises that right. In practice, for a VAT-registered restaurant:

• A retained deposit or a charged no-show fee is VAT-inclusive income: you account for output tax on it, exactly as if the meal had been served.
• No adjustment or VAT refund is allowed just because the guest never turned up.
• If you refund the deposit to the customer, the consideration is reduced and the VAT is adjusted in the normal way.

Price your no-show fee with that in mind: a "£20 per head" charge is £20 gross, not £20 net. If VAT is material to your decision, confirm the details with your accountant; the gov.uk pages above are the authoritative starting point.

How to communicate deposits and no-show charges so they are enforceable

An impeccably fair fee is still unenforceable if the customer never agreed to it. The CMA's guidance is blunt on this: important terms must be brought to the consumer's attention before the contract is made, not buried in small print or revealed after the booking. For a restaurant that means:

• State the policy at the point of booking. On your booking page, the deposit amount or no-show fee must be visible before the guest confirms, not only in a linked terms document. If you take bookings by phone, say it out loud and follow up in writing.
• Repeat it in the confirmation email. The confirmation is your written record that the guest knew the terms. Automatic confirmations that restate the cancellation cut-off and the charge close the "nobody told me" argument.
• Make cancelling genuinely easy. A one-click cancellation link in the confirmation and reminder emails is not just good manners; it strengthens your position, because a guest who could cancel effortlessly and still failed to show has no excuse. It also converts silent no-shows into freed tables you can resell, which is the real goal.
• Apply the policy consistently, with judgement. Waiving the fee for a genuine emergency costs you little and protects your reputation; silently charging regulars without warning destroys it. Keep the discretion, but keep it human.
• Keep records. Store when and how the guest saw the terms, the confirmation sent, and any cancellation attempt. If a charge is ever disputed with the card issuer, that trail is what wins it.

Let's be honest: even a perfect policy will not eliminate no-shows entirely, and a fee you have to charge is still a worse outcome than a guest who shows up or cancels in time. That is why the charge should sit at the end of a chain of gentler nudges: confirmations, reminders and a frictionless way to bow out.

Setting this up without commission-based software

You do not need an expensive reservation platform to run a legally solid deposit or card-hold policy. ViteUneTable's free plan (no time limit, no commission, no per-cover fees) gives you an online booking link and widget with automatic confirmation emails, which is where the legal groundwork happens: the policy is displayed at booking and restated in writing. The Standard pack (€29 excl. VAT/month) adds email reminders and Reserve with Google, and the Standard + Anti No-Show pack (€49 excl. VAT/month) adds credit card holds, so the bank imprint is captured at booking and a no-show can be charged in line with the policy your guest accepted. Being built in Europe, it is GDPR-native by design, which matters when you are storing guests' contact details and card commitments under UK GDPR.

Frequently asked questions

Can a UK restaurant legally keep a deposit if a customer does not show up?

Yes, provided the deposit was clearly disclosed before booking and the amount kept reflects the restaurant's genuine loss. Under paragraphs 5 and 6 of Schedule 2 of the Consumer Rights Act 2015, a term requiring a disproportionately high sum on cancellation or breach may be deemed unfair and therefore not binding.

Is there a legal maximum for a restaurant no-show fee in the UK?

No. The law sets no fixed cap. The test is proportionality: the fee must reflect what the restaurant actually loses from the empty table, taking into account any realistic chance of reselling it. A fee well above the margin the booking would have generated is at risk of being ruled unfair.

Is a card hold better than a deposit for a UK restaurant?

For everyday bookings, usually yes. A card hold secures the guest's card details without taking any money, so guests who turn up pay nothing extra, while the restaurant can still charge the disclosed fee after a no-show. Deposits and prepayments remain the better fit for large groups, events and ticketed menus where the potential loss is concentrated.

Do I have to pay VAT on a no-show charge?

If you are VAT-registered, yes. Since 1 March 2019, HMRC treats retained deposits and no-show charges as taxable consideration, so output VAT is due on the amount you keep. If you refund the deposit, the VAT is adjusted in the normal way.

Can I make my booking deposits completely non-refundable?

Terms that make a prepayment non-refundable in all circumstances, regardless of when or why the customer cancels, are unlikely to be fair according to CMA guidance. A deposit kept in full is easier to justify when it is a small share of the total price and the customer cancelled too late for the table to be resold.