Summer VAT reduction for children’s activities: what businesses need to know

The government has just announced a temporarily reduced VAT rate of 5% for qualifying supplies, with the goal of reducing the cost of activities and services for families with children during the summer holiday period.

The measure will be implemented from 25 June 2026 to 1 September 2026, and will apply to businesses making supplies directly to families with children, such as:

Restaurants, cafés, and other catering establishments.
Cinemas, theatres, and exhibition or performance venues.
Operators of circuses, fairs, amusement parks, theme parks, adventure and water parks, zoos and other animal attractions, soft play centres, observation attractions, and similar family-focused venues.
Museums and cultural attractions.

Where these conditions are met, the reduced rate of VAT will be applied to children’s meals, children’s tickets and admission to certain attractions.

Supplies intended only for adults will not qualify. However, at some family-friendly attractions, the reduced VAT rate will apply to tickets for all visitors, regardless of age.

A positive step for the sectors

For many operators, this reduction presents an opportunity to:

Increase footfall by offering more attractive pricing.
Improve affordability for families during a time of rising costs.
Enhance competitiveness, particularly for venues reliant on discretionary spending.

For businesses still recovering from recent economic pressures, this kind of targeted relief may provide a meaningful short-term boost.

Pricing strategy: Pass it on or retain margin?

The announcement is more than just a temporary tax shift, it also creates a pricing decision for businesses: whether to pass the VAT saving on to customers through lower meal, ticket or entry prices, or retain some or all of the benefit to support margins. In practice, many businesses are likely to take a blended approach, balancing customer expectations with commercial pressures.

Practical VAT considerations

Whilst the headline rate change is simple, the detail matters. When preparing for the upcoming change, affected businesses should review the following:

1. Scope of the Relief

Careful analysis is needed to determine:

Which supplies qualify for relief (for example, sporting activities are excluded).
Whether the way the supply is marketed, priced and presented should be changed to enable the reduced rate to apply.
How mixed supplies (e.g. family tickets, bundled offers) are treated.

2. System and process changes

Operators will need to ensure that:

Till systems and accounting software are updated correctly.
Staff are aware of when the reduced rate applies.
VAT is accounted for accurately across different income streams.

3. Timing and transitional issues

Extra care is needed around:

Advance bookings and prepayments.
Tickets sold before the change but validated after.
Admission spanning the change period.

4. EPOS and VAT coding

Businesses should review EPOS setup and VAT coding to ensure qualifying children’s meals, tickets and admissions are mapped correctly, and that reduced-rate and standard-rate supplies can be identified and reported accurately.

A realistic perspective

While the measure is clearly positive, it is unlikely to be a complete solution to wider cost pressures in the sector. Energy, staffing, and overhead costs remain high, and consumer spending is still under pressure. However, this reduction does provide a useful lever, particularly for businesses willing to actively use it to attract customers and drive engagement.

Final thoughts

This VAT reduction is a welcome and practical intervention, offering both immediate financial benefit and a wider opportunity to rethink pricing and customer engagement strategies. Businesses that take a proactive and well-planned approach are likely to see the greatest benefit.

If you’d like further advice related to this announcement, or have any general VAT queries, contact our team using the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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