Summer 2026 VAT Changes: What Hospitality and Leisure Businesses Need to Know

By Max Stanley, Senior Manager, Burgess Hodgson

The Chancellor, Rachel Reeves, has announced temporary VAT reductions for certain hospitality and leisure supplies over the 2026 summer holiday period.

Between 25 June and 1 September 2026 inclusive, eligible children’s meals and admission tickets to a range of attractions will benefit from a reduced VAT rate of 5%.

While the changes may appear straightforward at first glance, the detail behind the rules is important – particularly for restaurants, cafés, attractions and entertainment venues that will need to ensure the correct VAT treatment is applied during this period.

Reduced VAT on Children’s Meals

The temporary 5% VAT rate applies to children’s meals where both of the following conditions are met:

• The meal is marketed and sold specifically as a children’s meal
• The meal is supplied for consumption on the premises as part of catering services provided by a restaurant, café or similar establishment

This means the reduced rate does not apply to takeaway supplies.

What counts as a “children’s meal”?

The rules focus heavily on how the meal is presented and marketed, rather than simply portion size or who consumes it.

HMRC will look at factors such as:

• Menu presentation
• Pricing
• Marketing and descriptions
• Whether the meal is clearly identified as a children’s option

Importantly, the reduced rate can still apply even if an adult purchases or consumes the meal.

Drinks, desserts and add-ons

The reduced VAT rate also extends to non-alcoholic drinks included as part of the children’s meal package.

However:

• Any meal supplied with alcohol will not qualify as a children’s meal
• Optional extras, upgrades or add-ons priced separately remain subject to their normal VAT treatment

There is also an important distinction where additional items appear on the children’s menu. For example, if a dessert or soft drink is listed as an additional item within the children’s menu offering, it may still qualify for the reduced rate. Items ordered from the standard menu would remain standard rated.

For hospitality businesses, accurate till reporting during this period will be essential. Restaurants should ensure their systems can clearly identify qualifying children’s meal sales for bookkeeping and VAT reporting purposes.

Reduced VAT on Admissions to Attractions

The temporary 5% VAT rate also applies to admissions for a wide range of leisure and cultural attractions, including:

• Cinemas
• Theatres
• Exhibitions
• Theme parks and water parks
• Adventure parks and outdoor activity centres
• Museums and heritage sites
• Zoos and wildlife parks
• Soft play centres and indoor play facilities
• Observation attractions and viewing platforms
• Circuses and fairs

Sporting events are specifically excluded from the relief.

Special rules for cinemas, theatres and exhibitions

For cinemas, theatres and exhibitions, the reduced rate only applies to tickets marketed specifically as children’s admissions.

In addition, family tickets that include at least one child may qualify for the reduced rate on the entire package price, provided they are genuinely marketed and sold as family tickets rather than simply treated as a group booking discount.

For many of the other qualifying attractions, the reduced rate applies regardless of the visitor’s age.

Timing Matters: Time of Supply Rules

One of the most important aspects of the new rules is the timing of admission.

The reduced VAT rate applies based on when the admission takes place, not when the booking is made or invoiced.

For example:

• A ticket purchased before 25 June 2026 for admission during the qualifying period may still benefit from the reduced rate
• A ticket purchased during the qualifying period for admission on or after 2 September 2026 will remain standard rated

Businesses that have already accepted bookings at the standard VAT rate for qualifying admission dates may amend those supplies to the reduced rate. However, government guidance indicates that customers should generally be refunded any overpaid VAT where applicable.

What Businesses Should Do Now

Businesses affected by these temporary changes should review:

• Till and EPOS system settings
• Product and ticket categorisation
• Menu wording and marketing
• Booking systems and advance ticketing processes
• VAT reporting procedures

The distinction between standard-rated and reduced-rated supplies during this period could become complex, particularly where businesses offer mixed packages, upgrades or optional extras.

Final Thoughts

Although these temporary VAT reductions are designed to support families and encourage spending during the summer holidays, they also introduce additional administrative complexity for affected businesses.

As with many VAT changes, the detail matters – particularly around marketing, packaging and timing.

If you are unsure how these rules apply to your business, now is a good opportunity to review your systems and processes ahead of the summer period.