01 July 2026
What Businesses Need to Know
The Government has now released firmer guidance on the temporary VAT reduction that will run from 25th June to 1st September 2026. Branded as part of the Great British Summer Savings initiative, the scheme aims to make family activities more affordable during the school holidays while supporting hospitality, tourism and leisure businesses.
For many businesses, this is a welcome boost at the height of the summer season.
However, as with any temporary VAT change, it brings administrative challenges that need careful planning.
Below is a clear breakdown of what the reduced rate covers, how it applies in practice and what you should prepare for before the scheme goes live.
What the 5% VAT Rate Covers
HMRC has confirmed that the temporary 5% rate applies only to qualifying children’s products and services.
These include:
- ·Children’s meals served in restaurants, cafés, pubs and similar venues.
- ·Tickets for children for eligible attractions and events.
- ·Entry to attractions where a specific children’s ticket or children’s rate is offered (or family ticket including one child)
The reduced rate applies only where the supply is specifically for a child.
Standard rated adult meals, mixed group tickets and general admission remain at 20%
Key Points from HMRC’s Updated Guidance.
- Clear distinction between adult and child pricing:
Businesses must ensure that children’s prices are separately identifiable on menus, price lists and till systems.
- Eligibility depends on the nature of the supply:
A children’s meal must be a smaller portion or a designated children’s option.
An adult meal purchased for a child does not qualify.
- Attractions must offer a genuine children’s ticket:
If an attraction charges a single flat rate for all visitors, the reduced rate cannot be applied.
- Packages and bundles require careful treatment:
If a package includes both adult and child elements, you must apportion the value between standard and reduced rated supplies.
- The reduced rate applies only during the qualifying period:
Supplies made before 25 June or after 1 September must be charged at the standard rate, even if booked or paid for in advance.
Practical Steps for Businesses:
- Update your tills and accounting systems to ensure the 5% rate is available and correctly mapped.
- Review menus, price lists and ticketing to ensure children’s items are clearly defined.
- Train staff so they understand which items qualify and how to process them.
- Check your online booking platforms to ensure the correct VAT rate is applied during the qualifying period.
- Plan for the reversal ready for 2nd September when the rate returns to 20%.
Temporary VAT changes often create pressure points for hospitality and tourism businesses, particularly where systems are not updated in time. Early preparation will help you avoid errors and reduce the risk of later corrections.
How This Could Benefit Your Business
Although the scheme is temporary, it offers a valuable opportunity to:
- Attract more families during the peak holiday season.
- Increase footfall and repeat visits.
- ·Offer competitive pricing without reducing margins.
- Strengthen your position in a busy summer market.
For businesses in coastal and rural tourism areas, the reduced rate could provide a meaningful uplift at a crucial time of year.
Our Final Thoughts
The temporary 5% VAT rate is designed to support families and boost the leisure and hospitality sector during the summer of 2026. With clear planning and accurate implementation, businesses can take full advantage of the scheme while staying compliant with HMRC’s requirements.
If you would like support preparing for the temporary VAT changes or want to ensure your systems are fully compliant before the 25 June start date, our local teams are here to help.
Our Tenby & Haverfordwest Office
Our Pembrokeshire team works closely with hospitality and tourism businesses across the coast. If you run a restaurant, café, attraction or family activity venue, we can guide you through the VAT changes and help you make the most of the summer season.
Contact the team today to arrange a chat.
Tenby: 01834 844743
Haverfordwest: 01437 766749
