A temporary VAT reduction has been announced to support families during the summer holidays, with the standard rate of VAT cut from 20% to 5% between 25 June and 1 September 2026.
While the measure is intended to encourage spending across the hospitality, leisure and attractions sectors, businesses will need to act quickly to implement the changes and ensure the correct VAT treatment is applied. HMRC has issued guidance outlining how the measure is expected to operate in practice.
What’s changing?
The temporary 5% VAT rate will apply to:
- Children’s meals consumed on the premises of restaurants, cafés and similar establishments
- Children’s admission tickets to cinemas, exhibitions and live performances
- Family tickets for those same venues (covering both child and adult elements)
- Admission to family-friendly attractions, including theme parks, museums, zoos and indoor play centres (for all visitors, regardless of age)
Sporting activities are excluded from the VAT cut, and VAT-exempt supplies remain unaffected.
Children’s meals: a limited relief
The rules for children’s meals are narrower than businesses may expect.
To qualify, a meal must be clearly marketed and sold as a children’s meal and supplied as part of on-site catering. Smaller portions of adult meals, discounted adult meals and similar alternatives will not qualify.
Where a children’s meal is sold as a bundle, for example including a drink, the entire package can benefit from the reduced rate.
Importantly, the reduced rate applies only to children’s food. Standard-rated VAT will continue to apply to adult meals and other food and drink sold outside a qualifying children’s offer.
Tickets and attractions
The relief applies more broadly to admissions, but the distinction between categories is important.
Cinemas, theatres, exhibitions and shows
- Children’s tickets qualify for the reduced rate
- Family tickets also qualify in full, including the adult element, where the ticket is marketed as a family package
- Adult-only tickets remain standard-rated
Attractions
For attractions, eligibility is determined by the type of venue rather than the age of the visitor. As a result, the reduced rate applies to all admissions to qualifying venues such as theme parks, zoos, museums, heritage sites and indoor play centres.
However, the relief does not extend to secondary spending, including food and drink purchases (other than qualifying children’s meals), merchandise and souvenirs.
Practical challenges for businesses
Although the measure may help boost demand, businesses will need to consider a number of practical issues. EPOS systems, pricing structures and accounting processes may all require updating at short notice for a relief that lasts fewer than ten weeks.
The rules, particularly those relating to children’s meals and the correct treatment of different ticket types, may not always be straightforward to apply, increasing the risk of incorrect VAT treatment. Businesses will also need to decide whether and how much of the VAT saving to pass on to customers.
Additional complexities may arise where advance bookings have been taken, tickets remain valid after 1 September 2026, or bundled packages include both qualifying and non-qualifying supplies.
The government has indicated that customers who have prepaid should receive the benefit of the reduced VAT rate. However, this is not a legal requirement, leaving businesses to determine their own approach.
Our view
While the temporary VAT cut is likely to be welcomed by families, its short-term nature creates practical and administrative challenges for affected businesses. Taking time now to review systems, pricing and VAT processes will help ensure the relief is implemented correctly and minimise the risk of costly errors.
How we can help
Our VAT specialists can help you understand how the changes apply to your business, review the VAT treatment of your supplies and identify any areas of uncertainty before the relief takes effect.
If you would like to discuss the impact of the summer VAT cut or need support implementing the changes, please get in touch with our VAT team.
