Chancellor Rachel Reeves has announced a temporary cut in VAT from 20% to 5% on summer attractions such as theme parks, zoos, museums, and soft-play centres during the school holidays. The measure, part of a £300m scheme called 'Great British summer savings', also includes free bus rides for under-16s in England during August and applies to children's theatre and cinema tickets as well as kids' meals in restaurants.
The Treasury estimates that if companies pass on the savings, a child's cinema ticket could drop by £1.50, and a family day out at a wildlife park could be £17 cheaper. The VAT reduction will run from 25 June to 1 September, aligning with Scottish school holidays. Reeves also confirmed a postponement of fuel duty increases originally set for September and December.
To fund the scheme, the chancellor announced changes to the 'foreign branch profits' regime, targeting oil and gas companies that use complex structures to reduce UK tax. She stated the move would raise 'hundreds of millions of pounds a year' from firms benefiting from increased prices due to the war in Iran. The new tax measures take effect from 1 September.
In other measures, Reeves suspended import tariffs on some foods, including chocolate and biscuits, and raised the tax-free mileage rate for workers claiming driving costs by 10p. However, a proposal for supermarkets to commit to fixed prices on staple foods in exchange for eased regulations was rejected by retailers.
Paul Nowak of the TUC welcomed the steps but warned that further support would be needed as the economic impact of the Iran conflict deepens. Reeves declined to outline winter support plans but reiterated that any future measures would be 'targeted and temporary'.
