Temporary Summer VAT Reduction – What Businesses Need to Know

The government has announced a temporary reduction in VAT from 20% to 5% on certain supplies for summer 2026. This measure is designed to help reduce costs for families during the school holidays and encourage spending across the leisure and hospitality sectors.

The reduced rate will apply for a limited period, from 25 June 2026 to 1 September 2026 (inclusive), and businesses in relevant sectors should carefully consider how this change affects their pricing, systems, and VAT accounting.

Under the flat rate scheme, you would be expected to charge your customers the published VAT rate (in this case, 5%) during the summer window. However, this does not change the fixed flat rate percentage of your total VAT-inclusive turnover, determined by your business type (e.g., catering 12.5%, pubs 6.5%, etc)

Flat rate percentages do not change. The 5% relief does not alter your flat rate tariff.

Who Will Be Affected?

You may be impacted if your business supplies any of the following:

1. Children’s Meals (Eat-In Only)

The reduced rate applies to:

• Meals clearly marketed and sold as children’s meals
• Food consumed on the premises (e.g. restaurants, cafés, and similar venues)
• Fixed-price children’s meals, which qualify in full for the 5% rate

Exclusions:

• Takeaway food (remains standard rated)
• Smaller or discounted adult meals

2. Children’s Tickets to Cultural Events

Eligible supplies include:

• Children’s tickets to cinemas, theatres, concerts, shows, and exhibitions
• Family tickets, provided they include at least one child (the full ticket qualifies)

Exclusions:

• Adult-only tickets, which remain subject to 20% VAT

3. Family Attractions (Admissions)

The 5% rate applies to admissions to family-focused attractions, including:

• Theme parks
• Zoos
• Museums
• Soft play centres
• Similar venues

Importantly, the reduced rate applies to all admission tickets (adult and child).

Note that:

• Food, merchandise, and upgrades (e.g. fast-track entry) remain at their normal VAT rate

What Is Not Included?

The following supplies do not qualify for the temporary reduction:

• Sporting events and sports participation fees
• Takeaway food
• Season tickets or multi-entry passes extending beyond 1 September 2026 (unless priced the same as a single entry)
• Supplies that are already VAT exempt

Key VAT Accounting Considerations

Businesses should be aware of several important points:

• Time of supply rules apply
  The VAT rate is determined by the date of admission or supply, not the booking or payment date.
• Forward bookings
  Tickets for use after 1 September 2026 must still be charged at the standard 20% rate, even if purchased during the reduced-rate period.
• Adjustments and refunds
  If you have already charged VAT at 20% on eligible supplies:
  • You may adjust your VAT accounting and refund customers the difference
  • While not strictly mandatory, HMRC will expect refunds to be passed on where adjustments are made.

What Should You Do Next?

If your business operates in hospitality, leisure, or cultural sectors, now is the time to:

• Review pricing structures
• Update EPOS systems and invoicing processes
• Ensure correct VAT treatment across all qualifying supplies
• Train staff to understand which items are eligible

If you think this change may affect your business, or you would like support reviewing your pricing, invoicing, or VAT returns, please contact the team at vat@gwayre.co.uk and we will be happy to help.