HMRC Announces Temporary VAT Reduction
HMRC has announced a temporary reduction in the VAT rate from 20% to 5% on qualifying children’s meals supplied by restaurants, cafés and similar establishments. The reduced rate will apply from 25 June 2026 to 1 September 2026 (inclusive) as part of the Government’s summer support measures for families. (GOV.UK)Which Children’s Meals Qualify?
A children’s meal will qualify for the 5% VAT rate where:- The meal is marketed, priced and presented specifically as a children’s meal.
- The meal appears on a dedicated children’s menu.
- The meal is consumed on the premises.
- Any drink included within the meal is non-alcoholic. (GOV.UK)
What Qualifies for 5% VAT?
Qualifying Supplies
- Children’s meal deals sold from a dedicated children’s menu
- Fixed-price children’s meal packages including a main meal, drink and dessert
- Additional items purchased from the children’s menu and added to a children’s meal
- Non-alcoholic drinks included within a children’s meal package
Non-Qualifying Supplies
- Takeaway children’s meals
- Smaller or discounted versions of adult meals
- Adult menu items added to a children’s meal
- Shared meals intended for adults and children
- Meals supplied as part of VAT-exempt education or care services
- Children’s meals that include alcoholic drinks
Practical Examples
| Scenario | VAT Rate |
|---|---|
| Children’s meal deal (main, drink and dessert) | 5% |
| Children’s menu dessert added to a children’s meal | 5% |
| Dessert selected from the adult menu | 20% |
| Smaller portion of an adult meal not listed on children’s menu | 20% |
| Children’s meal supplied as takeaway | 20% |
Action Required for Hospitality Businesses
Businesses should review their systems before 25 June 2026 to ensure:
- Children’s menu items are correctly coded at 5% VAT.
- Adult menu items remain at 20% VAT.
- EPOS, till systems and accounting software are updated.
- Staff understand which items qualify for the reduced rate.
- VAT settings are reverted after 1 September 2026. (Saffery)
Key Takeaway
The determining factor is not the age of the customer but how the meal is marketed, priced and presented. Businesses with clearly defined children’s menus should review their VAT settings promptly to ensure compliance and maximise the benefit of this temporary relief. (GOV.UK)
