There have recently been two notable VAT developments impacting the hospitality sector. Both present opportunities, but also require careful consideration to ensure the correct treatment is applied.
Temporary 5% VAT rate on children’s meals and family attractions
The Government has introduced a temporary reduction in VAT from 20% to 5% on certain family-focused supplies, effective from 25 June to 1 September 2026 (inclusive).
For hospitality operators, this aligns with peak summer trading and offers a potential commercial advantage, alongside some practical and compliance challenges.
What’s in scope?
- Children’s meals in restaurants, pubs, cafés and hotels, where they are clearly marketed, priced and designed for children. Adult meals remain standard-rated.
- Family attractions (where relevant), with the reduced rate applying to all admission tickets if the venue qualifies as family-focused.
- Children’s tickets for events, such as to theatres, cinemas, concerts, exhibitions and shows.
Key considerations
The relief applies only to qualifying supplies within the defined period. Operators will need to:
- Clearly distinguish between adult and children’s offerings
- Carefully assess mixed supplies, such as bundled family deals
- Consider the treatment of advance bookings and deposits
Practical focus
Businesses should review:
- Pricing strategy – whether to pass on the saving or retain margin
- EPOS systems – ensuring correct rates are applied and reversed in September
- Internal controls and training – to support consistent application
Queenscourt Limited v HMRC – VAT on dipping pots
The recent Upper Tribunal decision in Queenscourt Limited v HMRC considered whether dipping pots supplied with takeaway meals form part of a single standard-rated supply or separate supplies.
Overturning the earlier decision, the Tribunal found that dips were separately identifiable items with independent value, and could therefore be treated as separate zero-rated supplies, rather than part of a standard-rated meal.
What this means in practice
This decision may create opportunities for operators offering:
- Meal deals with dips or cold sides
- Bundled takeaway offers
However, the position remains fact-specific, and HMRC may still appeal. The VAT treatment will depend on how items are priced, presented and marketed, as well as how they are configured within systems.
How HaysMac can help
VAT in the hospitality sector continues to evolve, and both of the above developments highlight the importance of getting the detail right.
Our specialist VAT team works closely with hospitality businesses to:
- Confirm the correct VAT treatment of complex or mixed supplies
- Support pricing and structuring decisions
- Ensure systems and processes are robust and compliant
- Identify potential opportunities and risks
If you would like to discuss how these changes could affect your business, please get in touch with your usual HaysMac contact or our VAT team.
