Temporary Reduced Rate of VAT - What Businesses Need to Know

The Chancellor, Rachel Reeves, recently announced a temporary reduction in VAT as part of the Great British Summer Savings package, aimed at helping families with the cost of summer activities while supporting businesses that rely on seasonal footfall.

From 25 June 2026 to 1 September 2026 inclusive, the VAT rate will be reduced from 20% to 5% for certain eligible activities, including qualifying children’s meals, children’s admissions to some entertainment venues, and admission to specified family attractions.

Who is likely to be affected?

• Restaurants, cafés and similar businesses offering children’s meals for consumption on the premises.
• Cinemas, theatres, concert venues, exhibition venues and similar businesses selling children’s or family admission tickets.
• Operators of family attractions such as amusement parks, museums, heritage sites, zoos, adventure parks and soft play centres. 

What should businesses do now?

Although the measure is temporary, businesses should not underestimate the practical work involved in applying the reduced rate correctly. The following steps should help reduce the risk of errors:

1.  Check which supplies qualify

Review menus, ticket types, packages and attractions to confirm which items fall within the reduced rate and which remain standard-rated.

2.  Update tills, booking systems and accounting software

Ensure your systems can apply the 5% rate only to qualifying supplies and revert to the standard rate of 20% after 1 September 2026.

3.  Review pricing and communications

Decide whether to pass on the VAT saving in full or in part, and ensure menus, websites, booking pages and promotional material are updated consistently.

4.  Consider advance bookings and vouchers

Check how the tax point rules apply to tickets, vouchers or packages already sold for use during the reduced-rate period.

5.  Separate mixed supplies  

Where customers purchase admission together with food, merchandise, upgrades or other extras which don’t qualify, make sure the correct VAT treatment is applied to each element.

6.  Keep evidence

Retain copies of menus, ticket descriptions, price lists and marketing material showing how eligible supplies were presented to customers.

7.  Train staff

Front-of-house, finance and booking teams should understand which items qualify and how to deal with customer queries or system errors.

How we can help

The reduced rate may create opportunities for affected businesses, but it also brings compliance risks if the rules are applied incorrectly. If you would like to discuss whether your supplies qualify, how to update your systems, or how the temporary rate may affect your pricing, please get in touch at enquiries@teamjs.co.uk.