Merlin Entertainments. Nando's. Cineworld. Gulliver's. The list of big names backing the government's Great British Summer Savings scheme reads like a school holiday itinerary. They've made their commitments publicly, at a roundtable with the Chancellor, and the message from the top couldn't be clearer: pass the savings on.
But you're not Merlin Entertainments. So what does this actually mean for your business?
What the scheme is, and what it isn't
From 25 June to 1 September 2026, the government is temporarily cutting VAT - value added tax - from 20% to 5% on two things: children's meals eaten in restaurants and cafés, and family admission tickets for attractions like theme parks, soft play centres, zoos, cinemas, and theatres.
It's designed to ease the pressure on family budgets during the school holidays, and to drive footfall into the hospitality and leisure sectors during what should be their busiest weeks of the year.
What it isn't is a mandate. The government is urging businesses to pass the savings on to customers. But the decision is yours.
The honest case for passing it on
Lower prices attract more customers. That's not spin, it's the straightforward logic behind the scheme. If you're in a competitive market and families are choosing between you and a rival who has dropped their prices, the VAT cut becomes a commercial decision as much as a goodwill one.
There's also a marketing opportunity here that costs you nothing extra. Businesses that shout about their lower summer prices on things like social media, in email newsletters, on signs in windows, can turn a tax change into a genuine reason for new customers to walk through the door. The big names are doing exactly this. You can too.
The honest case for keeping the saving
You are running a small business, not a public service. If your margins are tight - and for many independent businesses in hospitality and leisure right now, they are - absorbing the saving rather than passing it on is a completely legitimate choice.
There's also the question of admin. Updating your pricing, menus, booking systems, and till systems before 25 June takes real time and effort. Then you have to reverse all of it on 2 September. For a sole trader or a small team already stretched thin, that burden is worth factoring in.
Keeping the saving doesn't make you the villain of the summer. But it might make you a business still standing in October.
What you need to do regardless
Whether you pass the saving on or not, you still have to apply the correct VAT rate to qualifying products. Getting it wrong creates a liability with HMRC, and that's a problem no summer footfall boost can fix.
Here's what to work through before the scheme goes live:
Know what qualifies. Children's meals eaten on your premises qualify. Takeaway meals don't. Family admission tickets qualify. Standard adult tickets don't. The distinction matters, and HMRC has published guidance if you want the full detail.
Check your bundled packages. If you sell a family ticket that includes parking, merchandise, or a meal deal, you need to separate the qualifying and non-qualifying parts for tax purposes. Only the admission element benefits from the reduced rate.
Update your systems. Menus, booking platforms, till systems, accounting software. Anything that records or displays prices needs to reflect the correct rate on qualifying items.
Brief your team. Staff need to understand what's changed so they can answer customer questions without hesitation. A five-minute briefing before 25 June is worth an hour of awkward conversations after it.
Plan your reversal now. The scheme ends on 1 September. Set a reminder. Make the switch back to 20% part of your plan from the start, not an afterthought.
A quick example to make the numbers real
Say you charge £10 for a child's meal eaten in. Under the standard 20% VAT rate, £1.67 of that goes to HMRC. Under the 5% rate, it's £0.48. That's a saving of £1.19 per meal, which you can pass to the customer, keep within the business, or split between the two.
Multiply that across a busy summer and the numbers start to matter, whichever way you decide to play it.
One thing that could catch you out
Advance bookings. If a customer buys a ticket now for an event that falls between 25 June and 1 September, the 5% rate applies, even if they bought before the scheme started. But if they buy a ticket during the scheme for an event after 1 September, the standard 20% rate applies. Make sure your booking system handles this correctly, not just your menus.
