As explained in an earlier article, the rate of VAT on children’s meals and certain activities and attractions is reduced from 20% to 5% between 25 June and 1 September 2026.

HMRC’s Revenue and Customs Brief 5 (2026) explains how the temporary reduced rate of VAT is to be applied. On 27 July 2026, HMRC updated the Brief to include additional information on several areas. A summary of the new guidance is provided below. 

• Bundles and mixed supplies. HMRC says that only the part of the supply that falls within the descriptions covered by the Brief should be treated as eligible for the reduced rate. Other elements of the supply should be treated according to their normal VAT liability.
• Party packages containing multiple elements. The guidance states that the temporary reduced rate “only applies where all elements [of the package] are eligible and no additional goods or services, such as a party entertainer, are included”. The reduced rate can apply to children’s meals and/or admission where they are “supplied separately (and not artificially split)”.
• Prepayments. The Brief explains that businesses may choose to account for VAT at the reduced rate of 5% for advance payments received between 3 June 2026 (the date on which the policy was announced) and 25 June 2026 (the date on which the legislation came into force), provided:
  • the admission is to a qualifying attraction during the period of the relief;
  • a clear record is kept of when the business decided to apply the reduced rate; and
  • the business accounts for any adjustment in line with the normal VAT accounting rules.

The updated Brief also confirms that:

• users of the flat rate scheme should continue to apply their current percentage to calculate their VAT liability; and
• the temporary reduced rate does not apply to margin scheme supplies under the tour operator’s margin scheme.

ICAEW's view