Temporary VAT reduction for leisure and hospitality businesses

The Government has introduced a short-term reduction in VAT that could support businesses in the leisure, hospitality, and attractions industries over the summer period.
What’s changing?
Between 25 June 2026 and 1 September 2026, VAT on certain supplies aimed at children and families will drop from 20% to 5%.
What does the reduced 5% rate cover?
The temporary lower rate applies to the following:

• Children’s meals
  Selected meals intended for children, provided they are eaten on-site.
• Children’s tickets to events
  Entry for children to entertainment and cultural venues such as cinemas, theatres, concerts, and exhibitions.
• Family-friendly attraction entry
  Admission tickets for both adults and children to attractions designed for families, including theme parks, zoos, and botanical gardens.

What steps should your business take?
To ensure compliance and take full advantage of the reduced VAT rate, consider the following actions:

1. Update sales and till systems
   Your EPOS or point-of-sale systems can be configured to apply the 5% rate to qualifying transactions from 25 June 2026.
   Older systems may need manual updates to include the new rate, so this should be checked promptly.
2. Check invoicing procedures
   Invoices issued during the temporary period must accurately reflect the correct VAT rate (5%) where applicable.
3. Handle mixed supplies and meal deals carefully
   If you offer bundled products that include items with different VAT treatments, you will need to divide the VAT appropriately.
   In these cases, the overall price should be fairly allocated between items, usually based on their individual selling prices.
   Support may be required to calculate appropriate allocations.
4. Plan for the return to standard VAT
   As this is only a temporary measure, businesses must ensure systems are prepared to switch back to the standard 20% VAT rate from 2 September 2026.

Existing VAT exemptions
The reduced 5% rate only applies to supplies that would normally be subject to the standard VAT rate.
Items or services that are already exempt from VAT, such as certain museum admissions under cultural exemption rules will remain unaffected.

Children’s meals
The reduced rate applies to the supply of children’s meals where both of the following conditions are met:
• the meal is held out for sale only as a meal for children
• the meal is supplied as part of catering services by a restaurant, café or similar establishment for consumption on the premises
Where a children’s meal is supplied for a single inclusive price (for example including a drink or additional courses), the entire package can qualify for the reduced rate.
Whether a meal is held out for sale only as a meal for a child will depend on how it is marketed, presented and priced rather than who consumes it (for example, being included on a distinct children’s menu).
The reduced VAT rate does not include takeaway meals.
How can we support?
Our VAT specialists are here to support you in confidently implementing the new rate while helping you maximise its commercial advantages. Get in touch with our team here.