What’s Changing: Temporary Reduced VAT Rates
The government has announced a temporary reduced rate of VAT (5%) for specific supplies aimed at families from 25 June to 1 September 2026. Supplies include:
- Children’s meals sold on children-only menus or clearly marketed as children’s meals in cafés, restaurants and similar premises. (gov.uk)
- Children’s tickets for theatre, cinema, shows, exhibitions, etc., where tickets are marketed, priced and presented as children’s admissions. (gov.uk)
- Admissions to family-friendly attractions (e.g. amusement parks, museums, zoos) where the right of admission is made available to all customers, regardless of age. (gov.uk)
This relief replaces the usual 20% standard VAT rate, for eligible supplies during the qualifying period. Outside this, standard VAT rates resume.
Why It Matters:
- Families get relief during peak summer season, helping make leisure and meals more affordable.
- Hospitality, attractions, and leisure businesses may see increased demand.
- Cash flow will be temporarily adjusted—businesses may receive a smaller VAT liability during the period, but refunds or adjustments may be required after.
Practical Examples
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A restaurant offering a fixed-price children’s meal, including a drink and dessert, on a distinct children’s menu will charge 5% VAT on that supply for meals consumed on-premises. If extra items from adult menu are sold or add-ons priced separately, those remain standard rated. - Example: a £10 children’s meal with dessert + drink, all inclusive — 5% VAT. But if drink is an extra salad from adult menu, that portion gets 20% VAT. (gov.uk)
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A family ticket to a zoo allowing entry of two children and two adults, where the ticket is marketed as a “family” package, will qualify for the 5% VAT on the entire ticket. If no family-ticket exists, only children’s tickets qualify. Children’s admissions priced separately also qualify. (gov.uk)
What Businesses Should Do Now
- Review menus, ticketing strategies and marketing to clearly delimit what qualifies as “children’s admissions” or “family tickets.” Ensure marketing materials, pricing, and menu structure align with eligibility criteria.
- Train staff to distinguish between items eligible for reduced VAT vs standard VAT.
- Adjust billing systems and point-of-sale systems to flag eligible items and separate VAT charging accordingly.
- If you've already received payments in advance (prepayments) for eligible supplies during the relief period, you may apply the reduced rate—but must follow time-of-supply rules carefully. (gov.uk)
- Document your supply periods accurately—dates of admissions, menu changes, price offerings etc.—to support VAT return adjustments or HMRC reviews.
Key Risks and Limitations
- Supplies that include goods or services beyond eligible “children’s meals” or “family admissions” have mixed items—only the covered portion gets relief. Misapplication can lead to penalties.
- Offerings marketed as smaller or cheaper portions of adult meals do not qualify unless held out as children’s menu items.
- VAT notices and rules on “bundles” and “time of supply” can be complex—ensuring correct tax points is essential.
The reduced VAT relief is temporary—but well-structured planning and clear accounting can help businesses maximize benefit and avoid pitfalls during this period.