VAT – Temporary cut to 5% for Children’s Meals

VAT – Temporary cut to 5% for Children’s Meals

While the focus of the pre-briefing of the chancellor’s plans was a package of summer holiday measures, dubbed the ‘Great British Summer Saving Scheme’ there were a number of more serious tax measures announced, including a 5% temporary VAT rate.

On the time-limited summer support, the chancellor announced a 5% summer VAT rate for children’s meals at restaurants, cafes and hotels and the wider hospitality sector over the summer. The discounted VAT rate will kick in from 25 June 2026 when the school holidays start in Scotland and will end on 1 September 2026.

There will also be a discounted 5% VAT rate on children’s tickets to attractions, including theme parks, cinemas, zoos, fairs and soft play.

This will require a very quick change to software to ensure the correct VAT rate is charged and the food served is sold as part of a children’s menus.

The HMRC guidance on the reduced rate VAT states: ‘The reduced rate applies to the following categories of supplies where the conditions described are met – children’s meals, children’s cinema, theatre, show and concert tickets, as well as admission to certain attractions.’

The reduced rate applies to the supply of children’s meals where both of the following conditions are met:

• the meal is for sale only as a meal for children
• the meal is supplied as part of catering services by a restaurant, café or similar establishment for consumption on the premises.

HMRC stressed: ‘Where businesses have already accounted for VAT at the standard rate and subsequently choose to apply the lower rate, they should make the necessary adjustments in their VAT accounts. The government would expect that where a customer has prepaid that they would be refunded for any additional VAT paid.’

Bus fares across England will also be free for children aged between five and 15 in August 2026, subject to bus companies signing up. They are already free in London and Scotland.