Rachel Reeves has announced a temporary reduction in VAT from 20% to 5% on summer attractions such as theme parks, zoos, and soft-play centres, as part of a £300m package to help households during the school holidays. The 'Great British summer savings' scheme, running from 25 June to 1 September, also includes free bus rides for under-16s in England during August and a 10p increase in the tax-free mileage rate for workers.
The Chancellor told MPs that the cut would apply to tickets for attractions, children's theatre and cinema, and kids' meals in restaurants. If savings are passed on, the Treasury estimates it could reduce a child's cinema ticket by £1.50 or a family day out at a wildlife park by £17. Reeves said the move aims to ease the impact of the war in Iran on household finances.
To help fund the package, Reeves announced changes to the 'foreign branch profits' regime, targeting oil and gas companies that use complex structures to reduce their UK tax. 'Currently, some oil and gas groups pay little or no corporation tax on their UK energy trading profits. Today we are putting an end to that practice,' she said, expecting to raise hundreds of millions of pounds annually from September.
Other measures include postponing planned fuel duty increases due in September and December, and suspending import tariffs on certain foods like chocolate and biscuits, with a call for supermarkets to pass on savings. Reeves also noted the UK economy grew 0.6% in Q1, the fastest in the G7, before the Iran conflict hit.
The quarterly energy price cap from July is expected to rise to around £1,850, and the TUC warned the government may need to do more to shield families from rising inflation as the war continues. Reeves declined to specify winter support but reiterated it would be 'targeted and temporary'.
