We all know that our industry already provides heavily discounted kids meals and tickets which are often sold at a loss. Add this to the limited time period to which the cut applies, plus the cost of reprogramming POS equipment and reprinting menus it would be easy to ignore the intervention and indeed not participate at all.

However, like any potential future VAT cut, the UK Government will expect that this cut it is passed on to the consumer. Notwithstanding that any future VAT cut would initially help restore what are now wafer-thin margins and therefore take time to impact consumer prices through a reduction in price increases. This current and limited VAT cut for Kids will be seen as a test and could go against any potential VAT cut in the future if viewed as increasing businesses margins over consumer benefits.

We do not want to damage our case that cutting VAT across the industry would stimulate consumer spending and thus drive growth with increased employment taxes and increased VAT returns due to increased consumer spending, making up for the initial loss of VAT revenue to the Treasury.

I would therefore encourage everyone, to participate in the current scheme and where possible endeavour to make this VAT cut visible to consumers.

We are also working with our partner BDO NI to understand the complexities of the scheme, and they have kindly provided the guidance below. In the coming days BDO NI will also provide a podcast for our members with updated guidance.

In the meantime, our work to secure a comprehensive VAT cut for our sector continues alongside our engagement to secure a fair business rates valuation across all business types in our sector.

BDO NI Guidance

Reduced 5% VAT Relief – What You Need to Know Before 25 June

With the temporary 5% VAT rate taking effect from 25 June 2026, we wanted to reach out directly to ensure you are fully prepared for the changes ahead and aware of some of the complexities that require careful consideration before the relief window opens.

While the headline rate reduction sounds straightforward, the detailed rules contain a number of nuances that could have real cost implications and opportunities for your business.

Children’s Meals

• This is an area where businesses are likely to make assumptions that don’t hold up under scrutiny. The 5% rate applies only to meals sold exclusively as a children’s meal, with distinct menu pricing. Discounted adult portions, takeaway children’s options and shared meals do not qualify.
• If your menus or POS systems are not configured with this distinction in mind, you risk applying the wrong rate.

Cinema & Theatre Tickets

• The rules here are more generous than you would expect, with children’s tickets and family tickets qualifying in full, including the adult element of a family ticket.
• However, standalone adult tickets remain subject to the standard 20% rate.
• Where your ticketing system bundles or categorises these differently, a careful review of how tickets are sold and recorded will be necessary.

Attraction Admissions

• General admission to qualifying venues applies to all customers regardless of age during the relief period, which is a simpler position but only where admission is genuinely general in nature. Any tiered or age-differentiated pricing structures will need to be reviewed. 
• Other goods or services (for example upgrades) will remain subject to their normal VAT treatment.

Season Tickets and Multi-Entry Passes

• This is one of the more complex areas. Season or multi-entry tickets only qualify at 5% if they relate solely to dates falling within the relief period, or if they are priced at the same level as a single-day entry. Higher-value season passes are excluded.

Advance Payments and Prepayments

• If your business has already received prepayments at the standard 20% rate for supplies that will fall within the relief period, there is an election available to apply the 5% rate retrospectively but this carries an obligation to refund customers any excess VAT charged. This is both a cash flow consideration and a customer relations matter, and the administrative time to deal with this may be uncommercial. 

Mixed Supplies

• Where eligible and non-eligible items are sold together as a single bundled price, normal VAT apportionment rules apply.
• This is an area where errors are common, particularly where businesses assume the lower rate applies to an entire transaction. Getting the apportionment methodology right from the outset will be important.

What This Means in Practice

• The relief period runs from 25 June until 1 September 2026 (inclusive).  This is a relatively short window but will require businesses to be operationally ready from day one. That means reviewing your product and service eligibility, configuring your POS and billing systems, updating staff guidance, and ensuring your VAT accounting correctly reflects the change throughout the period and on reversion to 20%.
• For businesses operating across the UK–Ireland border, there are additional cross-border considerations that will need to be worked through separately.

How We Can Help

• Our VAT team are going through this detail at pace and will be working closely with clients across the hospitality, leisure and cultural sectors to prepare for this change. 
• We can assist with:
• Eligibility assessments across your full product and service range
• POS and billing system configuration guidance
• Staff training and internal guidance notes
• Advance payment and prepayment position reviews
• Apportionment calculations for mixed supplies
• VAT account adjustments and corrective returns where 20% has already been charged
• Cross-border advice for UK–Ireland operations
• Readiness planning for reversion to 20% from 2 September 2026

With just five weeks until the relief opens, we would encourage you to get in touch as soon as possible so we can assess your specific position and ensure you are ready to apply the correct rate with confidence from day one.