The government has announced a temporary VAT reduction that will affect a wide range of consumer-facing businesses this summer. From 25 June 2026 to 1 September 2026, a reduced rate of VAT of 5% will apply to certain supplies of children’s meals, children’s admission tickets, and entry to qualifying family attractions. This replaces the standard rate of 20% for supplies within scope during that period (with supplies that are usually VAT-exempt or zero-rated being unaffected). The temporary reduced rate applies only to supplies that would otherwise be subject to VAT.
For businesses in hospitality, leisure, and entertainment, this is a welcome measure, but one that comes with a number of important conditions, exclusions, and practical considerations that need to be understood before the reduced rate takes effect. Getting it wrong could mean accounting for VAT incorrectly, which creates compliance risk in both directions. This article summarises what the government VAT reduction covers, what it does not cover, and what businesses should be doing now to prepare.
Who does this affect?
The VAT reduction applies to businesses making consumer-facing supplies to families with children during the school summer holidays. HMRC’s published guidance sets out the following types of organisations as falling within scope:
- Restaurants, cafés and similar catering establishments
- Cinemas, theatres, exhibition and performance venues
- Operators of amusement parks, theme parks, water parks, adventure parks, soft play centres, zoos, aquariums, wildlife parks, farm visitor attractions, circuses, observation attractions and similar family-focused venues
- Museums and similar cultural attractions
If your business operates in any of these sectors, you need to understand how the reduced rate applies to your specific supplies and where it does not apply.
Children’s meals: The detail matters
The VAT rate reduction applies to children’s meals, but only where two specific conditions are both met. The meal must be held out for sale only as a meal for children, and it must be supplied as part of catering services by a restaurant, café, or similar establishment for consumption on the premises. It would be a good idea to retain clear evidence of how meals have been marketed, as HMRC will assess eligibility based on these factors rather than the identity of the customer purchasing the meal.
The key here is “held out.” Whether a meal qualifies depends on how it is marketed, presented, and priced, not who ends up eating it. A meal on a dedicated children’s menu will typically qualify. A smaller portion of an adult meal that happens to be cheaper will not, even if a child orders it.
There are several specific exclusions worth being aware of:
- Meals marketed as smaller portions or lower-calorie options do not qualify
- Discounted versions of adult meals are excluded
- Shared meals intended for both adults and children are not covered
- Takeaway meals do not qualify, regardless of how they are presented
- Meals that include an alcoholic drink are excluded
Where a children’s meal is supplied as a single inclusive package, for example, a main course, drink and dessert for one price, the entire package can benefit from the reduced rate, provided all elements are part of the children’s menu offering. Optional add-ons priced separately that are not part of the children’s meal remain subject to their normal VAT liability.
For businesses that currently offer a children’s menu, the practical implication is that the presentation and pricing of those items on your menus and till system needs to clearly distinguish them as children’s meals. This is standard good practice, and it is also the basis on which HMRC will assess whether the reduced rate was correctly applied.
Tickets and admissions: Knowing what qualifies
The government VAT reduction also applies to children’s admission tickets for cinemas, theatrical performances, shows, concerts and exhibitions. A children’s ticket is one that is held out for sale only as a right of admission for a child, based on how it is marketed, priced and presented.
Family tickets, where a single ticket admits a combination of adults and children, also qualify for the reduced rate in full, provided the ticket is sold as a family admission package. Standalone group tickets that are not marketed as family admissions do not qualify, and standard adult tickets remain subject to the standard rate.
For qualifying attractions, including theme parks, zoos, soft play centres, adventure parks, museums, heritage sites, and observation attractions, the reduced rate applies to admission charges for all customers regardless of age, not just children. This is a broader application than the meals and tickets categories, and reflects the family-friendly nature of these venues.
There are, however, some important boundaries. The reduced rate covers admission charges only. Goods or services sold separately at the venue, such as food, merchandise, upgrades, and pay-per-ride attractions, remain subject to their normal VAT treatment. Season tickets and passes that allow entry beyond 1 September 2026 also will not qualify unless they are priced the same as a standard single-entry ticket.
Sports admission and participation in sport or physical recreation are explicitly excluded from the VAT reduction, even where children are involved.
Prepayments and timing: An important consideration
The reduced rate applies to supplies of admission for a date falling between 25 June 2026 and 1 September 2026. Tickets sold now for admission during that window can benefit from the reduced rate. Tickets sold for dates on or after 2 September 2026 remain standard-rated. Where businesses have already taken advance payments and accounted for VAT at the standard rate, they have the option to apply the lower rate and make the necessary adjustments in their VAT accounts.
HMRC’s expectation is that where a customer has prepaid at the standard rate, businesses should refund the difference in VAT where the reduced rate subsequently applies. This is an area that requires careful attention. Any adjustments need to be properly documented and reflected in your VAT records.
Getting your systems right before 25 June
The temporary nature of this VAT rate reduction creates a specific operational challenge. Unlike a permanent rate change, businesses need to apply a different rate for a defined window and then revert to the standard rate on 2 September 2026. That means your till systems, accounting software, and invoicing processes need to be configured correctly and then reconfigured again at the end of the summer period. This is where mistakes are most likely to occur. Common risks to consider are:
- Applying the reduced rate to supplies that do not qualify, such as adult meals, takeaways, or sports admissions
- Failing to distinguish correctly between qualifying and non-qualifying items in mixed supplies or bundles
- Applying the reduced rate to tickets for dates outside the qualifying window
- Not making the appropriate adjustments for prepayments already accounted for at the standard rate
- Forgetting to revert to the standard rate from 2 September 2026
Given that the reduced rate applies for just over two months, it is worth taking the time now to review your product and pricing structures, brief your team on what qualifies, and ensure your systems are set up to apply the correct rate automatically, rather than relying on manual adjustments during what is typically one of the busiest trading periods of the year.
Whilst there is no legal requirement to pass on the VAT saving to customers, the policy intent behind the measure is to support families with children over the summer period, and businesses may wish to consider and document their pricing strategy, demonstrating their support of the policy.
Speak to HB&O about VAT compliance this summer
VAT can be deceptively complex, and temporary measures like this government VAT reduction can create as many questions as they answer. Whether you are a restaurant owner, a leisure operator, or a family attraction looking to understand how the new rules apply to your specific business, our VAT advisory team is here to help.
We can help you review your supplies, assess what qualifies under the new rules, and ensure your systems and processes are set up correctly before 25 June. Getting it right from the start is far simpler and less costly than unpicking errors after the fact.
Get in touch with the HB&O team today to arrange a conversation.
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