Summer VAT Changes Announced by HMRC
It is no secret that things are very tough right now for small businesses, with the ongoing cost of living and increased tax and regulatory burden placed by the current UK government. The hospitality sector particularly has been asking for more support given the tough economic environment and rising costs and, while these requests have largely been ignored so far, the government has announced recently ‘The Great British Summer Savings’ initiative targeted to help families with the cost of living over the summer period.
From 25 June until 1 September 2026 this will temporarily cut the standard VAT rate from 20% to 5% on specific family leisure activities and children’s meals across the UK. This initiative will cover attractions (admission tickets for both children and adults to theme parks, zoos, museums, soft play centres, circuses, and wildlife parks), entertainment (children and family tickets for cinemas, theatres, concerts and shows) and dining (specifically marked children’s meals on restaurant menus consumed on-site).
While this is some rare positive news for some businesses, the complexities of the scheme and compliance burden on small businesses in particular might present challenges, with a tight implementation window.
If your business is impact by the above, then action will be needed to ensure that the reduced VAT rate is applied correctly and that the accounting records are in place to assist with the VAT return preparation. You will need to review your point-of-sale booking/till systems and menus/websites to ensure that the VAT rate is accurately applied between this period.
Please note that businesses are not legally obligated to pass these savings onto consumers, you can choose to pass them on as a discount (which may help increase sales and be a good marketing tool) or retain them to help improve tight gross margins and cashflow.
More information can be found on the official guidance fact sheet link here, and if you have any questions or need any support on this area, please contact Frank Harling.