The government has announced a temporary reduced rate of VAT for children’s meals in restaurants and family leisure activities over the summer.
VAT will be reduced from 20% to 5% between 25 June and 1 September 2026 for qualifying activities as the government tries to ease pressure on household budgets and promote activity for tourist businesses.
The temporary VAT reduction applies in England, Wales, Scotland and Northern Ireland. In addition, children in England aged 5-15 will qualify for free bus travel during August.
The dates the relief applies between are set to coincide with the start of the Scottish school summer holiday on 25 June, and the end of the school holidays in England, Wales and Northern Ireland on 1 September.
Which services are eligible for the reduced rate?
The reduced 5% rate will apply to:
- Children’s meals served in restaurants for consumption on the premises. These need to be served from a dedicated children’s menu and marketed, presented and priced as such.
- Children’s and family tickets for cinema, theatre, exhibitions, shows and concerts.
- Admission tickets for children and adults to attractions such as amusement parks, fairs, circuses, museums, zoos, adventure parks, soft play and observation attractions.
Takeaway meals and sporting activities will not qualify for the reduced rate.
How will the reduced rate apply to season tickets and advance purchases?
Season tickets that permit repeat entries with the relief period (25 June - 1 September) will qualify for the reduced rate. However, where a ticket allows repeat entries before or after the relief period it will not qualify for the reduced rate, unless it is priced the same as a standard single-entry ticket.
The reduced rate can be applied to advance and prepaid sales where the admission will take place during the relief period. This includes those that were made before the government’s announcement.
If a business has already paid over standard rate VAT on such a sale on their VAT return, they can make an adjustment on their next return to be refunded the VAT. The government does however expect businesses to refund any overpaid VAT back to the customer.
How will businesses pass the savings on?
The government expects businesses to lower their prices so that the VAT cut is passed directly on to the customer.
This may require work in updating signage, tills, accounts software and websites to deal with the revised pricing for the summer. However, this may be justified by the increased footfall.
Affected businesses should check how the rules will apply in their specific circumstances. Detailed HMRC guidance is available to help businesses.
If you need any help in dealing with the temporary VAT reduction, please feel free to contact us. We would be happy to help you!