A temporary reduction in VAT is being introduced for certain children’s meals, tickets and family attractions over the school summer holiday period.
From 25 June 2026 to 1 September 2026, qualifying children’s meals supplied by restaurants, cafés, pubs and similar catering businesses will be subject to VAT at 5% instead of the usual 20%.
For hospitality businesses, this could create a useful short-term opportunity – but only where the rules are applied correctly.
What’s changing?
The reduced VAT rate applies to children’s meals where both of the following conditions are met:
- The meal is sold only as a children’s meal.
- The meal is supplied as part of catering services by a restaurant, café, pub or similar establishment for consumption on the premises.
In practice, this is likely to cover meals listed on a dedicated children’s menu, such as a fixed-price children’s meal including a main, drink and dessert.
The reduction doesn’t apply to takeaway meals, smaller adult portions, lower-calorie options, discounted adult meals, shared meals, or meals that are not clearly marketed and presented as being for children.
Why this matters for hospitality businesses
For pubs, restaurants and cafés, the temporary VAT cut could be used in two ways.
1. To increase profit margin
One option is to keep customer prices the same and retain the VAT saving within the business.
For example, if a children’s meal is currently priced at £6 including VAT, the VAT element at 20% is £1. Under the temporary 5% rate, the VAT element would be approximately 29p.
That creates a potential margin improvement of around 71p per qualifying meal, assuming the selling price stays the same.
For businesses already dealing with higher wage costs, food costs and overheads, this may provide some welcome breathing space during the summer period.
However, it is important that the VAT treatment is applied only to qualifying meals. Businesses should not simply reduce the VAT rate across all children’s food or all lower-priced meals without checking whether they meet the conditions.
2. To attract more families through summer offers
The other option is to pass some or all of the VAT saving on to customers.
This could be particularly useful for businesses that want to increase footfall during the school holidays.
For example, a pub or café could promote:
“Kids’ meals reduced for the summer”
“Family lunch offers during the school holidays”
“5% VAT summer saving passed on to customers”
This approach may reduce margin per meal, but could increase overall sales volume by bringing in more families during a busy trading period.
It may also help businesses stand out locally, especially where families are looking for more affordable days out over the summer.
Practical steps for businesses
The key point is that this change is not automatic: businesses will need to decide how they want to deal with the VAT reduction and make sure their systems and menus are set up correctly.
Practical steps to take:
- Review your children’s menu to check which items qualify.
- Make sure children’s meals are clearly described, priced and presented as children’s meals.
- Update till systems or EPOS systems so qualifying children’s meals are coded at 5% VAT during the period.
- Decide whether to keep prices the same or pass on the saving to customers.
- Train staff so they clearly understand which meals qualify and which do not.
- Keep records showing why the reduced rate has been applied.
- Review any meal deals or bundles carefully, particularly where drinks, desserts, upgrades or add-ons are included.
Where a children’s meal is sold for one inclusive price, such as a main, drink and dessert, the full package may qualify for the reduced rate. However, optional extras or upgrades charged separately may still be subject to their normal VAT treatment.
Watch out for common issues
There are a few areas where businesses could easily get caught out:
A smaller portion of an adult meal will not automatically qualify just because it is cheaper or smaller.
A meal must be held out for sale only as a children’s meal.
Takeaway meals do not qualify.
Items bought separately from the standard menu may not qualify, even if purchased for a child.
Businesses should also be careful with “free” items. Calling something free does not necessarily determine the VAT treatment. Normal VAT principles still apply.
Final thoughts
This temporary VAT reduction could be a useful opportunity for hospitality businesses over the summer.
You may choose to use the saving to support margins, or pass the saving on to customers as part of a summer marketing campaign to attract more families.
Either approach can be valid, but the important thing is to make a conscious decision and ensure the VAT treatment is applied correctly.
Businesses should review their menus, pricing, till systems and marketing before the rules come into effect on 25 June 2026.
If you run a pub, restaurant, café or family-focused venue and would like help reviewing how these changes apply to your business, please get in touch with the SeavorChartered team.
