What businesses need to know about the temporary 5% VAT rate

This new reduced rate is set to apply to VAT on children's menu meals and family leisure activities.

Under the new ‘Great British Summer Savings’ initiative, VAT on selected family-focused activities will fall from 20% to 5% between 25th June and 1st September 2026.

The temporary reduction is expected to apply to children’s meals in restaurants and cafés, children’s cinema and theatre tickets, and admission to attractions suitable for families with children.

While the VAT cut will be welcomed by businesses, inadvertent errors (such as applying the reduced 5% rate where the standard 20% rate should apply) could result in HMRC pursuing any underpaid VAT.

As this tax cut is only in place for a short period, businesses will need to ensure their systems and processes are updated in time. One of the key challenges will be applying the reduced VAT rate correctly.

The Government has published a technical paper with links to existing VAT guidance which applies. However more detailed guidance has not been released, meaning businesses should consider how they may be affected. Below is a checklist of key areas to review:

• Review your systems to ensure you can clearly distinguish between child and adult pricing and tickets.
• Review how you market supplies to customers. For example, the reduced rate applies only where meals are clearly presented as children’s meals and are supplied for consumption on the premises. Consider whether your menus or promotional materials clearly identify these as children’s offerings.
• Assess complex supplies, such as bundled packages (e.g. admission and food sold together) or advance bookings that span the change period, to identify potential VAT treatment issues early.

How TaxAssist Accountants can help

For help implementing any of these VAT changes or simply understanding what how the Government's Great British Summer Savings initiative could affect your business, call TaxAssist Accountants on 0800 0523 555 or contact us here. 

Last updated 17 Jun 2026 | First published 27 May 2026

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Andy Gibbs, ATT, CTA

Andy Gibbs ATT, CTA is Director of Technical Services at TaxAssist Accountants. Andy leads the Technical support function and is responsible for the delivery of technical support, guidance and practical solutions to TaxAssist Accountants and their staff. Andy also leads two of the Group’s specialist service companies, Payroll by TaxAssist and Tax Consulting by TaxAssist, which provide payroll and tax advisory support to the TaxAssist network. Before joining TaxAssist Accountants, Andy worked for one of the Big Four accountancy firms, advising high-net-worth individuals and private equity executives on a range of tax matters. Prior to this, he worked in regional practice, supporting owner-managed businesses and private individuals with both tax compliance and tax advisory projects across a variety of sectors. Andy is a Chartered Tax Adviser (CTA), holds the STEP Advanced Certificate in Trust and Estate Accounting, and works closely with franchisees to help them navigate technical challenges, maintain compliance and build successful, efficient accountancy practices.

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