Summer VAT has dropped to 5%. Is your business getting it right?

If you run a hospitality, leisure or family attractions business, there’s a temporary VAT reduction in place this summer that could affect what you’re charging and how you account for it.

From 25 June to 1 September 2026 inclusive, the VAT rate on certain children’s meals, tickets and family attractions has been reduced from 20% to 5% as part of the Government’s Great British Summer Savings package.

We’re already well into the temporary period, so if your business is affected, now is a good time to make sure you’re applying the right VAT rate and that you’re ready for it to return to 20% in September.

What does the 5% VAT rate cover?

The temporary reduced rate applies to several different areas, but the rules vary depending on what you’re selling.

Children’s meals

Qualifying children’s meals served in restaurants, cafés and similar establishments can be charged at 5% VAT.

Broadly, the meal needs to be:

• Consumed on the premises
• Held out for sale specifically as a children’s meal
• Marketed, presented and priced accordingly

Takeaway food doesn’t qualify for the temporary reduction and remains subject to the normal VAT rules.

Adult meals are also unaffected.

Cinemas, theatres, concerts and shows

The 5% rate can apply to children’s tickets for:

• Cinemas
• Theatres
• Concerts
• Exhibitions
• Shows

Qualifying family tickets can also benefit from the reduced rate where they include admission for at least one child.

Standard adult-only tickets remain at 20%.

Family attractions

The reduction is broader for qualifying family attractions, where admission tickets for both adults and children can fall within the 5% rate.

These can include:

• Amusement and theme parks
• Water parks
• Fairs
• Zoos, aquariums and wildlife parks
• Farm attractions
• Soft play centres
• Indoor bounce and play facilities
• Adventure parks and outdoor adventure centres
• Circuses
• Museums and similar cultural attractions
• Heritage sites
• Planetariums
• Nature reserves and botanical gardens
• Observation attractions

There are some important exceptions, particularly where admission would normally be exempt from VAT. An admission that is already VAT exempt doesn’t simply become subject to VAT at 5%.

What isn’t covered?

Not every summer activity qualifies.

The temporary reduction generally doesn’t apply to:

• Watching sporting events
• Paying to participate in sport or physical activities
• Takeaway food
• Adult meals in restaurants and cafés
• Adult-only tickets to cinemas, theatres, concerts, exhibitions and shows
• Supplies that fall outside the temporary period

So, unfortunately, calling something a “family activity” isn’t enough on its own.

Are businesses required to reduce their prices?

No.

The VAT rate on qualifying supplies has changed, but that doesn’t necessarily mean the price a customer pays has to fall by the same amount.

Businesses can decide how the VAT reduction affects their VAT-inclusive selling prices. That might mean passing the saving on to customers, passing on part of it, or maintaining existing prices.

Whatever you decide, the important thing from an accounting perspective is making sure the correct VAT rate is being applied and recorded.

What should affected businesses be checking now?

As the temporary rate is already in force, we’d recommend checking a few things sooner rather than later.

1. Make sure you’ve identified everything that qualifies. Don’t assume every product, ticket or service you sell receives the same VAT treatment. Mixed businesses in particular may have sales at different VAT rates.
2. Check your till and booking systems. Make sure the correct VAT rate is being applied and that your reports accurately distinguish between 5% and 20% sales.
3. Check your bookkeeping software. Whether you’re using Xero, QuickBooks or another system, check transactions are being recorded using the correct VAT codes.
4. Check your receipts and invoices. These should show the correct VAT treatment where required.
5. Make sure your team understands the difference. If staff are processing sales manually, they need to know which products qualify and which don’t.
6. Start preparing for September. The temporary reduction ends on 1 September 2026, with the standard VAT treatment returning from 2 September. That means tills, booking systems and accounting software may need changing again.

Be careful with advance bookings and season tickets

This is one area where we’d particularly recommend checking the VAT treatment rather than making assumptions.

Advance payments, tickets for visits taking place after the temporary period and season or multi-entry passes can have different VAT implications depending on the circumstances.

For example, a ticket sold during the summer period for admission after 1 September isn’t necessarily entitled to the temporary 5% rate simply because the customer paid for it while the reduction was in force.

Multi-entry and season tickets can also require additional consideration where they allow admission beyond the temporary period.

If you’re selling either, it’s worth checking how the rules apply to your particular setup.

What does it mean for families?

For families planning days out this summer, the VAT reduction gives businesses the opportunity to offer lower prices across a range of attractions and children’s meals.

You might therefore see savings at places such as zoos, theme parks, soft play centres, cinemas and other qualifying attractions.

But don’t assume every ticket price will automatically be cheaper. Businesses aren’t necessarily required to pass the entire VAT saving on through lower advertised prices.

The important date: 2 September

For businesses, perhaps the biggest thing to remember now isn’t when the temporary reduction started. It’s when it finishes.

From 2 September 2026, qualifying supplies return to their normal VAT treatment.

With different VAT rates potentially applying across different products and dates, it’s worth making sure your systems are ready for that change before September arrives.

Not sure whether your business qualifies?