Background

On 21 May 2026, the government announced the launch of a temporary reduced VAT rate of 5% for certain ‘family related’ activities from 25 June 2026 to 1 September 2026. Very little lead in time has been given for this, with the legislation only being made available on 3 June 2026.

Further, the business brief issued by HMRC and heavily publicised by them, does not appear to be fully cohesive with the underlying law itself.

The relief is targeted. It does not create a general reduced rate for hospitality, tourism or leisure. Businesses should therefore identify which of their supplies fall within the specified categories, apply the reduced rate only to those supplies, and continue to apply the normal VAT treatment to anything outside scope.

The Law

The Value Added Tax (Reduced Rate) (Hospitality and Tourism) Order 2026 (see here) has inserted the following into the scope of the reduced rating for UK VAT (noting that the full law is not copied below):

Food and drink
‘Supplies in the course of catering of any food which is—
(a) for consumption on the premises on which it is supplied, and
(b) part of a children’s meal
other than any supplies that are exempt supplies’

‘Note 1) “Food” includes drink.
Note 3) For the purposes of this Group a children’s meal is a meal which is only held out for sale as a meal for a child.’

Admission to events

‘Supplies of a right of admission to shows, exhibitions, theatres, concerts, and cinemas where—
(a) the right of admission is only held out for sale as a right of admission for a child, or
(b) the right of admission is only held out for sale as a right of admission for a family which includes one
child or more.

Supplies of a right of admission to circuses, fairs, amusement parks, adventure parks, soft-play centres, zoos, observation attractions, farm visitor attractions and nature reserves other than a right of admission to any events or facilities which are within Item 1 in this Group.

Supplies of a right of admission to museums and other similar cultural facilities other than a right of admission to any events or facilities which are within Item 1 in this Group.’

The provisions therefore encompass a range of businesses, some of which are focused on children’s tickets, while others cover all ages.

FAQs

Q: Do I have to pass this VAT benefit on to my customers? 

A: There is no legal requirement to pass the VAT benefit on to your customers. However, this relief is in the public domain and most customers (and HMRC) would typically expect this to result in a lowering of prices for the duration of the relief.

Q: Practically, how do I implement this change?

A: HMRC’s view is that businesses should ensure their till systems, booking platforms, menus, websites and invoices are updated before the relief begins. They should also retain records showing why a supply was treated as eligible, including the date of admission or consumption, the ticket type, menu description, pricing and any apportionment for mixed supplies.

Our view is that the practical implementation of this relief will be challenging for many businesses and should be determined on a case-by-case basis.

Further, the reduced rate depends heavily on how the relevant supply is described, marketed, priced and presented. We recommend that you review the current marketing material for your supplies to determine whether this is appropriate in the current environment and make any changes, as necessary.

Finally, it will be important for any system changes to recognise the booking date, payment date(s) and event dates as separate categories, to ensure that the temporary VAT rate is applied appropriately.

Q: Can I change my children’s menu now? 

A: Yes, a business may change its children’s menu, but it should do so carefully and for genuine commercial reasons. The eligibility of children’s meals depends on how the meal is held out for sale, including how it is marketed, priced and presented. HMRC’s guidance refers to meals served from a dedicated children’s menu and marketed, presented and priced as children’s meals. Simply re-labelling adult items, smaller portions or discounted adult meals as children’s meals may create VAT risk if the supply is not genuinely held out for sale as a meal for a child.

Q: What if someone has prepaid for their admission ticket and/or pays a deposit in advance towards this already, but the event takes place between 25 June 2026 to 1 September 2026?

A: Businesses may choose to continue to account for output tax at 20% on transactions with a tax point prior to the new rules being introduced. Alternatively, they can choose to apply the reduced rate to relevant supplies already made (e.g. prepayments or deposits made) but where the admission to the event will take place between 25 June 2026 and 1 September 2026. Please note that if the reduced rate is secured from HMRC on these, then HMRC has specified they expect that the VAT charged to the customer historically should be refunded to that customer. In practice, it may be appropriate to consider the ‘unjust enrichment’ rules to determine if there is a legal requirement to pass this refund back to customers.

Q: What if someone pays between 25 June 2026 and 1 September 2026 for admission to an event which will take place after 2 September 2026?

A: Tickets bought between 25 June 2026 and 1 September 2026 for admission to events on or after 2 September 2026 remain subject to the standard rate (unless another rate otherwise applies).

Q: What if I sell tickets to an attraction, but there is no set date for when the customer can attend and/or they can attend on multiple dates?

A: The reduced rate may apply if the first possible admission date falls between 25 June 2026 and 1 September 2026 and the customer isn’t paying a higher fee than would be charged for admission within the 25 June 2026 and 1 September 2026 window. Alternatively, the reduced rate may apply if all dates on which the customer can use the ticket fall between 25 June 2026 and 1 September 2026.

Q: I operate a cinema/theatre. Am I impacted? 

A: Yes, but only to the extent that you sell children’s tickets or family tickets, which includes one child or more.

Q: I operate a trampoline park. Am I impacted? 

A: HMRC’s business brief specifically mentions ‘soft play centres, indoor bounce parks and indoor play facilities’ and therefore the expectation is that HMRC would accept admission to a trampoline park as being covered by this relief (unless the VAT exemption applies). However, there is still some uncertainty in this regard.

Q: I operate a skate park. Am I impacted? 

A: The law specifically excludes admission to a sports event or sports facilities or an event or facilities for physical education or recreation. As such, the expectation is that HMRC would not accept that the temporary reduced rate covers admission to a skate park. However, there is still some uncertainty in this regard.

Q: What if I supply a ‘bundle’ of supplies, some of which are impacted by the temporary reduced rate?

A: Normal VAT rules apply. It will be necessary to determine whether one supply is the primary supply with other elements being ancillary. The VAT liability follows the primary supply. Alternatively, it may be appropriate to apportion the VAT rate across the bundle of supplies.

There are specific provisions in the legislation that bring family tickets into the reduced rate.

Q: What if people can upgrade their ticket to include merchandise and other products? 

A: The reduced rate applies to the charge for the right of admission only. Goods or services supplied separately (for example food, merchandise or upgrades) remain subject to their normal VAT treatment.

Q: What should I do if I am uncertain on the correct VAT treatment to apply? 

A: If you are unsure if the reduced VAT rate applies, then we recommend taking formal advice and/or contacting HMRC. We strongly recommend obtaining a reference for any conversation with HMRC and/or getting any confirmation from HMRC in writing.

If you are unsure if the reduced VAT rate applies, then we recommend accounting for output tax at the higher rate initially as a prudent stance, and then approaching HMRC to request a refund of any overpaid output tax.

Q: I need to change my invoicing position? 

A: As a reminder, it is not necessary to raise VAT invoices to customers who are not business customers and/or are not VAT registered, unless they request this. By raising a VAT invoice showing VAT at 20% you could potentially be creating a ‘debt to the crown’ and be required to account for VAT at 20%.

For VAT registered business customers, it would be necessary to ensure that appropriate VAT invoices are raised showing the correct VAT rate applicable. Any changes to the VAT treatment applicable may result in the business having to credit the original invoices and re-issue these with the correct VAT rate applied.

Q: Could this affect my inheritance tax (IHT) position if my business is now considered to be an ‘attraction’ under these rules?

A: The VAT classification is for a specific, temporary VAT measure and should not itself determine the inheritance tax treatment. However, if the business operations look like a visitor attraction in practice, and a different relief is typically applied for IHT purposes (e.g. Agricultural Property Relief), then the IHT position should be reviewed.

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The information provided on this platform is for general informational and educational purposes only and does not constitute professional advice.  Your actual tax position may depend upon your specific fact pattern and you should not rely on this information as an alternative to seeking formal advice. We accept no legal or financial responsibility from parties seeking to rely on this information.