Rachel Reeves has announced a reduction in the rate of VAT on tickets for theme parks, zoos, and museums from 20% to 5% over the summer holidays. The Chancellor set out the measure as part of a package aimed at easing the impact on the cost of living from the Iran war.
Details of the VAT Cut
Ms Reeves told the Commons in a statement on Thursday: “This will apply to ticket prices for both adults and children, covering attractions such as fairs, theme parks, zoos and museums. It will include children’s tickets for cinemas, concerts, soft play, and the theatre, and it will cut the cost of children’s meals in restaurants and cafes from 20% VAT to 5% as well.”
The changes will apply across England, Wales, Scotland, and Northern Ireland from June 25 until September 1. The Government expects businesses to pass on VAT savings to customers.
Great British Summer Savings Scheme
Her “Great British Summer Savings” scheme, which the Treasury estimated would cost around £300 million, also includes free bus travel for children aged between five and 15 in England during the school holidays in August. Other measures announced by Ms Reeves include a 10p per mile increase in tax-free mileage rates backdated to April, a £350 million critical chemicals resilience fund, a £120 million fund to help the ceramics sector, and the cutting of import tariffs on more than 100 types of food products.
The full package of measures comes at an estimated cost of £1.8 billion over six years, while the Treasury expects to raise hundreds of millions in revenue by changing the way oil and gas companies with overseas operations are taxed. This would put an end to the practice of some firms structuring their tax affairs “in a way which ensures they pay little or no corporation tax on their UK energy trading profits” and “raise hundreds of millions of pounds a year”, Ms Reeves said.
No Immediate Energy Bill Help
As expected, Ms Reeves did not announce immediate help with energy bills driven up by Donald Trump’s war in the Middle East. The household energy price cap is predicted to rise by £209 a year from July after the closure of the Strait of Hormuz pushed up global oil and gas prices. Ms Reeves told MPs: “Because of the decision that I made at the budget last year to cut £150 from energy bills, we have lessened the impact of rising prices and current external forecasts suggest that the cap from July will be at a similar level to the cap in April last year. We stand ready to act if market conditions worsen significantly later this year and I have been leading cross-Government contingency work on design of potential future targeted and temporary support for businesses.”
Final costings for all the measures will be detailed at the next budget following scoring from the Office for Budget Responsibility, according to the Treasury.
Prime Minister’s Comments
Sir Keir Starmer, who was seeking to regain control of the political agenda with the announcements after his premiership came under pressure, said it was “not right” that “for too many families those things – a trip to the seaside, a visit to the zoo, a bus ride into town for a day out, even a simple treat at the end of the week – are starting to feel out of reach”. The Government was providing “a serious response” to the “concerns people have about the months ahead” due to global instability, the Prime Minister wrote on Substack. “This summer, we are making it easier and more affordable for families to get out, spend time together, and make memories they will cherish for life.”
Industry Reaction
Theme parks and cinemas welcomed the slashing of VAT, with British Association of Leisure Parks, Piers and Attractions chief executive Paul Kelly saying it was “a very welcome and timely boost for the UK’s visitor attraction sector”. “Our members stand ready to pass on this benefit and deliver brilliant, memorable experiences for visitors of all ages.” UK Hospitality chairwoman Kate Nicholls said a lower rate of VAT for hospitality was “the quickest and simplest way to lower prices and boost consumer confidence”.
