Summer VAT cut ends on 1 September

Sara White, Editor, Business & Accountancy Daily. Croner.

The Great British Summer Savings VAT discount ends on Tuesday with government reporting millions of pounds saved by families but there are potential pitfalls for businesses due to VAT complexity and exemptions.

Millions of pounds have been saved by families so far via a VAT cut from 20% to 5% on kids’ meals in restaurants and tickets to attractions like theatres and soft play, alongside free bus fares in England for children aged five to 15.

But the end to the VAT discount comes with a warning from HMRC to make sure all till systems revert to 20% at midnight on Tuesday 1 September to avoid problems with VAT returns.

HMRC warned: ‘Businesses that used the reduced rate for children’s meals, tickets and family attractions must make sure they have switched back to charging the standard VAT rate of 20% on all relevant sales and supplies from 2 September 2026.  

‘They can do this by checking that their tills, point-of-sale systems, accounting software and VAT records are updated from 2 September.’ 

While businesses need to act swiftly, families still have a few days to enjoy the VAT discount, which have produced sizeable savings over the summer.

Visitors to holiday park operator, Haven, benefited to the tune of £4m after it joined the scheme, launched by the former chancellor Rachel Reeves to support families over the summer holidays dealing with cost of living crisis.

The VAT cut from 20% to 5% on kids’ meals in restaurants and tickets to attractions like theatres and soft play has been in place since 25 June, allowing families to enjoy their summer holiday activities for less, ‘giving people breathing space during the cost of living squeeze’, the Treasury said.

The scheme ends at midnight on 1 September and at that point businesses need to be very careful when making their VAT returns to ensure they comply with the temporary VAT cut.

Backing the scheme the recently appointed new chancellor, John Healey, visited Haven’s Kiln Park holiday park in Pembrokeshire, as the company announced that as a direct result of Great British Summer Savings families holidaying on its parks have saved more than £4m.

Around 251,000 families have benefited from the savings across Haven sites UK-wide, and 39,000 families across Wales. 

Over 2,100 eateries and attractions across the UK took part in the government’s summer VAT discount programme.

Businesses from across the UK have been passing on the savings, including Barleylands Farm Park in Essex, Playdale Farm Park in Scarborough and Alexandra Palace which has offered savings on activities including boating lake pedalos and family dining.

Adventure Attractions, the operator of Bournemouth Pier, has gone further by removing the historic Pier Toll and offering families discounts on attractions.

Healey said: ‘I want every family to get out and enjoy the bank holiday weekend by taking advantage of the final days of Great British Summer Savings.

‘This government is determined to give people a bit of breathing space. So families can afford the days out that make the summer holidays special whilst giving our world-class attractions and businesses a welcome boost in trade.’

Simon Palethorpe, CEO of Haven, said: ‘Great British Summer Savings is a good example of government and businesses, like Haven, working together to keep costs down for families who choose a British break – supporting jobs and boosting the coastal economies where we operate.’

Odeon cinemas, which joined the scheme at its launch in June, said more than 1.2m people have been to the cinema over the period and benefited from discounted ticket prices.

Greene King, another participating business, have sold more than 1.1m children’s meals and recorded more than 80,000 entries to its Wacky Warehouse soft play venues, resulting in cumulative savings for customers of more than £740,000.

Support will continue for households under the new PM Andy Burnham with measures announced over the last month including a £2 cap on bus fares from April 2027 and removing VAT from electricity bills this autumn, although the latest energy price cap will see an average £60 hike in bills from October just as the colder weather starts.

Action to cut business rates by 20% for pubs, social clubs and live music venues has also been announced, although this will not take effect until the new financial year.

Now all eyes are on Healey’s first Budget on 28 October to see whether the new chancellor will take radical action to get the economy moving after sluggish growth.

Businesses are hurting after a significant rise in employment costs after the hike in employer’s national insurance contributions in April 2025, above inflation rises in the national minimum wage for the past two years, not to mention the additional £5bn annual costs of meeting the new requirements under the Employment Rights Act 2025 including day one statutory sick pay, changes to unfair dismissal rules from 1 January 2027, and longer term plan to effectively end the use of zero hour contracts for gig workers.