Rachel Reeves has confirmed a new restaurant and cinema rule from next week. The Labour Party government has confirmed a temporary reduced rate of VAT for children's meals, tickets and family attractions.
Details of the VAT Reduction
A temporary reduced rate of VAT of 5% will apply to certain supplies of children’s meals and children’s admission to theatres, cinemas, concerts, exhibitions and shows. The reduced rate replaces the standard rate of VAT of 20% for supplies within scope during this period. These changes are subject to the relevant statutory instrument being made and coming into force, and this brief reflects the law as it is expected to apply once enacted.
It includes restaurants, cafés and similar catering establishments as well as cinemas, theatres, exhibition and performance venues.
Conditions for Children's Meals
HMRC confirmed: "The reduced rate applies to the supply of children’s meals where both of the following conditions are met: the meal is held out for sale only as a meal for children and the meal is supplied as part of catering services by a restaurant, café or similar establishment for consumption on the premises."
The Labour Party government's tax authority added: "Whether a meal is held out for sale only as a meal for a child will depend on how it is marketed, presented and priced rather than who consumes it (for example, being included on a distinct children’s menu)."
The reduced rate does not apply for meals marketed as smaller portions, lower-calorie options, discounted versions of adult meals or shared meals intended for both adults and children. Where the same meal appears on both an adult and children’s menu, the children’s version would normally be differentiated by portion size and or price. Portion size alone is not a determining factor.
Where a children’s meal is supplied for a single inclusive price (for example including a drink or additional courses), the entire package can qualify for the reduced rate. Optional items, add-ons or upgrades priced separately that do not form part of the children’s meal remain subject to their normal VAT liability. Describing an item as ‘free’ does not determine its VAT treatment and normal VAT principles apply.
Meals include drink, meaning that a non-alcoholic drink supplied as part of a children’s meal will qualify for the reduced rate. Meals that include an alcoholic drink will not be regarded as a children’s meal. Meals that are exempt from VAT (for example where supplied alongside exempt education or care) will be unaffected by these changes.
Takeaway meals do not qualify for the reduced rate.
