What UK families and businesses actually need to know
VAT cut to 5% on days out, children’s meals, and family attractions from 25 June.
Here’s what’s in it, what’s not, and what hospitality businesses need to do right now.
What the scheme actually does
The core mechanic is simple. VAT is temporarily reduced from 20% to 5% between 25 June and 1 September 2026 on a defined list of eligible services. That’s not a discount, it’s a change in the tax rate businesses are required to charge on qualifying sales.
Here’s what that looks like in practice. A family theme park ticket priced at £60 currently includes about £10 of VAT (at 20%). Under the 5% rate, the VAT element drops to roughly £2.86, a saving of just over £7. If the business passes it on fully, the ticket price drops accordingly. If they don’t, the margin improvement sits with them. Both are legitimate choices.
Important: no obligation to cut prices
Businesses can choose whether to pass the VAT saving on to customers through lower prices or keep prices unchanged. If prices remain unchanged, the business may benefit from improved margins. There is no obligation to reduce prices. HMRC’s guidance makes clear that the expectation is that businesses will pass it on, and the big chains like Merlin Entertainments (Alton Towers, Legoland, Thorpe Park) have already confirmed they will. But it’s a business decision. If you’re visiting an attraction that hasn’t reduced prices, they’re keeping the margin, which is their right.
What’s in and what’s not
This is where the detail matters. The reduced 5% rate applies to children’s meals served in restaurants for consumption on the premises, defined as meals served from a children’s menu and marketed, presented and priced as children’s meals. Children’s and family tickets for cinema, theatre, exhibitions, shows and concerts. Admission tickets for both children and adults to attractions such as amusement parks, fairs, circuses, museums, zoos, adventure parks, soft play and observation attractions.
The family ticket rule is genuinely useful: where a family ticket includes at least one qualifying child admission, the reduced VAT rate can apply to the entire family ticket, including the adult admissions. So you don’t need to buy separate tickets to benefit.
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✓Eligible (5% VAT) |
✗Not Eligible (20% VAT) |
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Have you already planned your summer days out? Some of those bookings may be cheaper if you rebook for dates after 25 June — worth checking.
What it means for families and how to make the most of it
Honestly, this is a meaningful saving for families who do a lot of days out in the summer. Not life-changing, but real. A zoo trip for two adults and two children, a restaurant lunch, and a cinema visit could collectively cost £30–£50 less within the scheme period than outside it — if businesses pass the savings on.
The advance booking rule is worth knowing. The reduced rate applies to advance bookings as long as the admission date falls between 25 June 2026 and 1 September 2026. So if you’re planning a busy summer, booking now for dates within the window locks in the lower price, assuming the venue has updated its pricing by then.
Family Savings Calculator
Estimate your savings if businesses pass on the full VAT reduction
- traction tickets (total price, £) 50
- Children’s meals (total, £) 35
- Cinema/theatre tickets (£) 10
£11.88 saved
Based on £95.00 total eligible spend, if the full VAT saving is passed on to you.
Assumes full VAT reduction (20% → 5%) is passed on by the business. Not all businesses are obliged to reduce prices.
Children aged 5 to 15 in the UK will also be able to travel free on local bus services throughout August, which stacks on top of the VAT cut nicely. If you’re taking kids on days out in August and there’s a bus route that works, the transport cost disappears entirely. That’s nothing when fuel and parking add up.
Example
A client of ours, a mum of three from Ilford, regular at our annual tax clinic, told us she’d been looking at a week of activities for the summer holidays with a rough budget of around £400. When we worked through what fell inside the scheme window, we estimated she’d save somewhere between £45 and £70 if the venues pass on the full reduction. Her exact words were “that’s basically a free day out.”
She’s right. And the point isn’t that £50 solves the cost-of-living crisis. It’s that summer activity costs compound fast, and a 15% effective price drop on the biggest-ticket days out does add up across a six-week holiday, especially if you combine it with the free bus travel in August.
What hospitality and leisure businesses need to do right now
If your business sells anything on the eligible list, this scheme is live from 25 June. That’s a very short runway. There’s a tight implementation window (and then a job to reverse it all on 2 September), which means updating pricing, menus, point of sale systems, booking systems, and VAT systems.
The reversal point is just as important as the start date. When the scheme ends on 1 September 2026, the standard 20% rate will automatically apply again. If your systems aren’t updated back on 2 September, you’ll be undercharging VAT and creating a liability that’s entirely your problem, not HMRC’s.
Don’t get caught on the way out
The 1 September reversal is where businesses will make mistakes. The rush to implement the 5% rate is front-of-mind right now. The return to 20% will arrive during one of the busiest trading periods of the year, when everyone’s tired. Diary the reversal date now, not on 31 August.
Business Compliance Checklist
- Identify all eligible products/services in your offering
Map each item against HMRC’s published eligibility list. Anything not clearly on the list stays at 20%. If in doubt, check with your accountant.
- Update your POS system and booking platform to the 5% rate For each eligible item from 25 June. Mixed-rate supplies (e.g. adult meal + children’s meal on one ticket) need to be split correctly in your system.
- Decide your pricing strategy and communicate it clearly
Are you reducing prices to pass on the savings, or retaining the margin? Either is valid, but customers will notice either way, so be upfront about it.
- Update menus and signage to reflect children’s meals correctly
Only meals from a dedicated children’s menu qualify. Smaller adult portions are not served to children. Your menu needs to clearly distinguish them.
- Brief all front-of-house and box office staff
Staff need to know which items are at 5% and which remain at 20%. Customer questions will come. Confusion at the till creates errors in your VAT records.
- Ensure your VAT return correctly reflects the mixed rates
Your summer VAT return will include sales at both 5% and 20%. Make sure your accounting software separates these correctly; don’t lump them together.
- Diary 2 September for the reversal back to 20%
Set a system reminder now. Reverse all eligible items back to 20% from 2 September. Failing to do this means you’ll undercharge VAT and owe HMRC the difference.
From SKZ Accountants
In my experience, the businesses that come unstuck with temporary VAT changes aren’t the ones that miss the start date, it’s the ones that forget the end date. We’ve seen this pattern before with COVID-era hospitality VAT cuts. Build the reversal into your calendar today, not in late August when you’re run off your feet.
The other measures in the package
The VAT cut is the headline, but the Chancellor’s statement contained several other notable announcements. Some of these are genuinely useful for businesses and individuals.
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Fuel duty freeze extended The existing 5p per litre fuel duty cut has been extended for the remainder of 2026, keeping fuel duty at its lowest rate in over 16 years. |
HGV road tax holiday A 12-month road tax holiday for hauliers has been announced, meaning operators will pay just £1 at renewal, a saving of up to £912 for the largest vehicles. |
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Mileage allowance increase The tax-free mileage rate has been increased by 10p per mile, backdated to April 2026, the first increase in 15 years. Worth updating your expense claims immediately. |
Red diesel duty cut The fuel duty rate on red diesel, used by farmers and rail freight operators, has been reduced by over a third until the end of the year. |
If you’re self-employed and doing any business mileage, have you updated your mileage rate from April 2026? That 10p increase is backdated — there’s money sitting there.
The honest verdict
Temporary VAT cuts get a mixed reception, and honestly, that’s fair. There’s always the question of whether businesses actually pass the savings on, whether the paperwork burden outweighs the benefit for smaller operators, and whether the relief reaches the families who need it most.
This one’s better designed than most. Targeting the specific categories that swallow family budgets in August, theme parks, zoos, cinemas, and children’s restaurant meals, rather than blanket hospitality relief, makes the savings more predictable and harder to quietly absorb into margins. The family ticket rule is particularly sensible. And the free bus travel in August stacks on top in a way that creates genuine compound savings for families who use it.
The bottom line
- For families
Use it consciously. Book eligible days out for dates within the scheme window, check whether the venue has updated their prices, and combine it with the August free bus travel where you can. The savings are real if you’re deliberate about it.
- For hospitality and leisure businesses
The implementation work is non-negotiable. You have days to get your systems, menus, and staff ready for 25 June. The businesses that will benefit most are the ones that communicate the savings clearly to customers, staff it properly, and crucially remember to reverse everything on 2 September. The scheme is a footfall opportunity. Don’t let compliance slip turn it into a VAT headache.
And if you’re uncertain about which of your products qualify, how to handle mixed-rate supplies, or what this means for your next VAT return, that’s exactly what we’re here for at SKZ Accountants. Don’t guess on VAT eligibility. It’s quicker to check than to correct.
Need help navigating the scheme? Talk to SKZ Accountants.
SKZ Accountants, specialist accountants in UK hospitality, leisure, and attractions businesses, get the VAT right for the scheme period and the reversal on 2 September. We also help individuals maximise savings, like the mileage rate increase.
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