Families could see the cost of summer days out reduced after the chancellor announced a temporary cut in VAT on a range of attractions and activities.
Rachel Reeves confirmed that VAT will be lowered from 20% to 5% during the school summer holidays, beginning when Scottish schools break up at the end of June and continuing until pupils in England, Wales and Northern Ireland return to school on 1 September.
The temporary reduction is expected to apply to a wide range of family activities including theme parks, museums, zoos and cinemas, as well as children’s meals in restaurants and cafés. Discounts on theatre performances, concerts, soft play centres and other entertainment venues are also included in the plans, although businesses will decide whether to pass the savings directly on to customers.
The announcement forms part of a wider package of measures introduced by the government in an effort to ease pressure on household finances during the cost-of-living crisis.
Alongside the VAT reduction, the government has also revealed plans for free bus travel for children throughout August and lower import taxes on selected everyday food items as part of its “Great British Summer Savings” initiative, which is expected to cost around £300 million.
Economy Minister Dr Caoimhe Archibald has encouraged businesses to pass on the newly announced temporary targeted VAT reduction to consumers to assist with the cost of living.
The Minister’s comments follow the announcement from the Chancellor in Westminster that a temporary cut in the rate of VAT on some summer attractions from 20% to 5% will apply over the summer holidays.
While welcoming the move, the Minister also repeated her call for a reduced VAT pilot for hospitality businesses in Northern Ireland.
The Minister said: “I welcome the Chancellor’s announcement of a temporary VAT cut on some family expenses this summer. This will provide a timely boost for households facing ongoing cost-of-living pressures. I would urge our local businesses to ensure that they pass on these savings to consumers, ensuring that families here can fully benefit from this measure over the summer months, which we know can be an expensive and worrying time for families to navigate.
“However, this short-term intervention does not address the longstanding VAT disparity faced by our broader local hospitality industry compared to the south.
“Along with the Finance Minister, I wrote to the Treasury earlier this year to ask that it considers a reduced VAT pilot scheme for hospitality within the north. Today’s announcement shows that targeted adjustments to VAT can be made when the political will is there and I urge the Chancellor to consider options for more meaningful and lasting reform.”
Speaking about the measures, Reeves said the aim was to help families enjoy quality time together without the constant concern of rising bills, while also offering support to businesses in the hospitality and leisure sectors.
The plans come at a time when households are facing increasing fuel costs and concerns over rising food and energy prices linked to ongoing global instability and supply chain disruption.
Although the government has announced the tax cut, it will ultimately be up to individual businesses whether they reduce prices for customers.
VAT, or value added tax, is charged on many goods and services across the UK, with the standard rate currently set at 20%.
Under the temporary summer reduction, the lower 5% rate is expected to cover children’s meals eaten in restaurants, family and children’s tickets for entertainment venues including cinemas and theatres, as well as admission to attractions such as amusement parks, zoos, museums, wildlife parks, circuses, soft play centres and nature reserves.
