This VAT reduction, introduced as part of the Great British Summer Savings initiative, is a temporary government measure designed to support families, encourage spending and help the hospitality and tourism sector during peak summer trading.

For many businesses, this is a genuine opportunity – but only if the reduced rate applies correctly. Get it wrong, and you risk charging the wrong VAT rate, creating errors on your VAT return, and storing up problems with HMRC.

Temporary Reduced Rate and Reduced Rate of VAT: What’s Changed?

From 25 June to 1 September 2026, the government has introduced a temporary reduced rate of 5% VAT on certain supplies.

This is a temporary VAT reduction from the current rate and standard rate of 20%, creating a lower rate of VAT (also referred to as a lower VAT rate or simply the lower rate).

VAT remains an indirect tax (sometimes referred to as added tax) and all normal VAT rules still apply, including tax point, invoicing and record keeping.

This VAT cut is targeted and not a general reduction for all goods and services across the sector.

Children’s Meals and Reduced Rate: What Qualifies?

The reduced rate of VAT applies to children’s meals that are clearly identified and sold as such.

To qualify:

• The food must be held out as a children’s meal
• It must normally be consumed on the premises
• Pricing and menus must be clear

What does not qualify:

• Alcohol
• Adult meals
• Most takeaway food (unless another rule applies)

This distinction matters. Charging VAT at the wrong rate creates compliance risk and costs money later.

Family Attractions, Admission Tickets and Children’s Tickets

The temporary reduction also applies to admission tickets for qualifying family attractions, including:

• Theme parks
• Amusement parks
• Soft play centres
• Zoos, farm parks and indoor activity venues

This includes:

• Children’s admission tickets
• Children’s tickets for cinemas, exhibitions and events
• A family ticket, provided at least one child is included

Retail sales, souvenirs and other retail goods remain at the standard rate.

Holiday Accommodation, Hotel Accommodation and Tourism Sector Bundles

Holiday accommodation and hotel accommodation are not automatically reduced. However, certain supplies may qualify where accommodation is bundled with:

• Children’s meals
• Admission to family attractions
• Local tickets sold as part of a package

These are classic grey areas involving mixed supplies and different rates of VAT. Apportionment is often required.

This is where the hospitality and tourism sector needs to be especially careful.

Practical Considerations for Many Businesses

Eligibility depends on more than what you sell. The practical considerations are about how you sell it.

Key points:

• Supplies must be correctly described
• Websites, menus and booking pages must be clear
• Bundles may need splitting across different rates
• VAT depends on the tax point – usually the date of admission or consumption, not payment

Advance bookings inside the relief window need review, especially where customers pay months in advance.

Keep evidence: menus, invoices, screenshots and decisions linked to your business name.

Flat Rate Scheme and Reduced Rate Impact

Businesses using the flat rate scheme should review whether it still works during the temporary reduced rate period.

The flat rate scheme often assumes sales at the standard rate, so a VAT reduction can reduce its benefit. For some businesses, switching schemes may save money – but timing and eligibility rules matter.

Systems, Accounting Software and Booking Platforms

Before the VAT cut starts, many businesses need to update:

• Accounting software
• Tills and EPOS systems
• Online booking platforms
• Invoices and receipts

Errors here can flow straight into your VAT return and create costly corrections later.

How the VAT Cut Affects the Hospitality and Tourism Sector

This VAT relief is designed to:

• Support families
• Encourage spending
• Help the tourism sector during summer

Restaurants, cafés, pubs, attractions and accommodation providers will all be affected differently. The biggest benefit comes where children and families are a core part of sales.

Further Information and Getting It Right

The rules are detailed and there are grey areas, especially around packages, goods and services, and bundled services.

If you are unsure:

• Check HMRC guidance
• Take professional advice before you charge VAT
• Make sure systems revert to the standard rate after 1 September 2026

Getting this wrong costs tax, time and confidence with customers.

If you operate in hospitality, tourism, or run family attractions, HLWA can help you apply the reduced rate, protect compliance and make the most of the temporary VAT reduction without unpleasant surprises later.