5% VAT Rate Summer 2026: A Complete Guide for Hospitality and Leisure Businesses
Could Your Business Benefit from the Temporary VAT Reduction?
The UK Government has announced a temporary VAT reduction under its new Great British Summer Savings Scheme, aimed at making family days out more affordable during the summer holidays.
Between 25 June 2026 and 1 September 2026, eligible hospitality, entertainment and leisure businesses may be able to apply a reduced 5% VAT rate instead of the standard 20% VAT rate on certain qualifying sales.
For many businesses, this presents an opportunity to improve competitiveness, attract more customers, and potentially reduce the VAT burden on eligible transactions. However, understanding exactly what qualifies and implementing the correct VAT treatment is essential.
At Morgan Reach Accountants, we are proactively reviewing this announcement with our clients to help them understand whether they can benefit from the scheme and what practical steps they need to take before it comes into effect.
What Is the Great British Summer Savings Scheme?
The scheme is a temporary government initiative designed to support families during the summer holiday period by reducing the VAT charged on selected family-focused hospitality and leisure activities.
Key Dates
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Start Date: 25 June 2026
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End Date: 1 September 2026
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Standard VAT Rate: 20%
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Temporary Reduced VAT Rate: 5%
The reduced rate only applies to specific qualifying transactions and does not cover all hospitality or leisure-related sales.
Which Businesses Could Benefit?
The temporary reduction may be relevant to businesses operating within the hospitality, leisure, entertainment and attractions sectors.
This includes:
Restaurants, Cafés and Pubs
Businesses that offer dedicated children’s menus for customers dining on the premises may qualify for the reduced rate on eligible children’s meals.
Family Attractions
Including:
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Theme parks
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Amusement parks
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Water parks
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Family activity centres
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Indoor entertainment venues
Zoos and Wildlife Attractions
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Zoos
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Aquariums
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Wildlife parks
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Farm attractions
Educational and Cultural Attractions
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Museums
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Heritage sites
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Planetariums
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Exhibitions
Family Entertainment Venues
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Soft play centres
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Indoor bounce parks
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Viewing towers
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Observation wheels
Entertainment Providers
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Cinemas
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Theatres
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Live musical performances
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Family-focused concerts and exhibitions
If your business operates within any of these sectors, it is worth reviewing your products and services to determine whether you can take advantage of the reduced VAT rate.
What Qualifies for the 5% VAT Rate?
Understanding the qualifying transactions is crucial.
Children’s Meals
Restaurants, cafés and pubs may apply the reduced 5% VAT rate where:
✔ The meal is offered from a dedicated children’s menu
✔ The meal is specifically marketed as a children’s option
✔ The meal is consumed on the premises
Example
A child ordering a meal from a clearly advertised children’s menu while dining in a restaurant may qualify for the 5% VAT rate.
Family and Children’s Entertainment Tickets
The reduced rate applies to:
✔ Family cinema tickets
✔ Children’s cinema tickets
✔ Family theatre tickets
✔ Children’s theatre admissions
✔ Family concert admissions
✔ Children’s exhibition tickets
Example
A family ticket purchased for a cinema showing during the qualifying period may benefit from the reduced VAT rate.
Admission to Family Attractions
The reduced rate applies to admission tickets at eligible attractions such as:
✔ Theme parks
✔ Water parks
✔ Zoos
✔ Aquariums
✔ Museums
✔ Heritage attractions
✔ Soft play centres
Example
A family of four visiting a zoo during the qualifying period may benefit from admission tickets subject to the reduced VAT rate.
What Does NOT Qualify?
Many businesses may incorrectly assume that all hospitality and leisure sales qualify. This is not the case.
The following remain subject to the standard VAT treatment:
|
Qualifies
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Does Not Qualify
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|---|---|
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Children’s meals from dedicated children’s menus
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Adult meals
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|
Family tickets
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Adult-only tickets
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|
Children’s tickets
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Alcoholic drinks
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|
Attraction admission tickets
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Soft drinks
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|
Family attraction entry
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Bottled water
|
|
Children’s entertainment admissions
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Takeaway food
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|
Eligible family admissions
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Sports activities
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|
Eligible family attractions
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Professional sports tickets
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Gift shop purchases
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|
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Merchandise sales
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|
|
Ride upgrades and extras
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|
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Half portions from adult menus
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Important Note for Restaurants
A smaller portion taken from an adult menu is not considered a children’s meal for the purposes of this relief. The meal must come from a dedicated children’s menu.
Advance Bookings and Existing Reservations
Many businesses are already accepting bookings for the summer holiday period.
The good news is that eligibility is generally determined by when the activity takes place rather than when payment was made.
This Means:
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Tickets purchased before 25 June may still qualify if the event or admission takes place during the qualifying period.
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Existing bookings may require VAT adjustments.
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Businesses should review their booking systems and accounting records carefully.
If your business has already processed advance bookings, it may be worth reviewing whether VAT corrections or customer refunds could be required.
What Should Businesses Do Before 25 June 2026?
Preparation is key.
Businesses should consider taking the following steps before the scheme begins.
1. Review Your Products and Services
Identify:
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Qualifying children’s meals
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Family ticket packages
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Children’s admissions
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Attraction entry fees
2. Update Your EPOS and Accounting Systems
Ensure systems can correctly:
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Apply the 5% VAT rate
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Distinguish qualifying transactions
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Produce accurate VAT records
3. Review Pricing Structures
Consider:
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Whether to pass the saving directly to customers
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Whether to maintain current prices
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Whether a combination approach is appropriate
4. Train Staff
Customer-facing teams should understand:
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Which products qualify
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Which products do not qualify
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How pricing will work during the scheme
5. Review Existing Bookings
Identify:
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Advance bookings
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Family ticket packages
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Admissions taking place during the qualifying period
6. Speak to Your Accountant
VAT rules can become complex quickly, particularly where businesses sell a mixture of qualifying and non-qualifying products.
Should You Pass the VAT Saving to Customers?
The Government has indicated that it expects businesses to use the relief to help reduce costs for families during the summer.
However, businesses generally retain flexibility over their pricing strategy.
Some businesses may choose to:
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Reduce prices for customers
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Keep prices unchanged and improve margins
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Use a combination of both approaches
The right decision will depend on your business model, competitive landscape and current operating costs.
Before making pricing changes, it is worth assessing the wider commercial impact on profitability and customer demand.
Frequently Asked Questions
1) Do adult meals qualify?
No. Only eligible meals sold from a dedicated children’s menu qualify.
2) Do takeaways qualify?
No. The children’s meal relief applies to meals consumed on the premises.
3) Do alcoholic drinks qualify?
No. Alcohol remains subject to standard VAT treatment.
4) Do family attraction tickets qualify?
Yes, where they fall within the categories covered by the scheme.
5) Do sports activities qualify?
No. Sports participation and professional sporting events are excluded.
6) Can businesses keep prices the same?
Businesses may choose their own pricing strategy, although the Government has encouraged businesses to pass on savings where possible.
7) What if tickets were booked before 25 June?
Businesses should review advance bookings carefully, as eligibility may depend on when the admission or event takes place.
How Morgan Reach Accountants Can Help
Government tax initiatives can create valuable opportunities for businesses, but only if they are implemented correctly.
Our team is proactively helping hospitality, entertainment and leisure businesses understand:
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Whether they qualify for the temporary 5% VAT rate
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Which products and services are eligible
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How to configure accounting and EPOS systems correctly
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How to manage advance bookings
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How to remain compliant with HMRC requirements
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How to maximise the commercial benefit of the relief
Every business is different. What qualifies for one organisation may not qualify for another, particularly where multiple products, ticket types or mixed supplies are involved.
If you operate a restaurant, café, pub, attraction, leisure venue, cinema, theatre or family entertainment business, we would be happy to review your circumstances and help you prepare before the scheme begins.
Need Help Applying the New VAT Rules?
Get in touch with Morgan Reach Accountants for tailored advice on how the temporary 5% VAT rate may apply to your business.
We’ll help you identify opportunities, implement the correct VAT treatment and ensure you’re fully prepared before the changes take effect.
Unsure whether your business qualifies for the temporary 5% VAT rate?
Our team can review your products, ticketing structure and VAT setup to help ensure you apply the correct treatment and remain compliant.
Contact Morgan Reach Accountants for tailored guidance.
