UK Chancellor Announces VAT Cut on Family Attractions and Children's Meals

Ticket prices for families at various attractions such as theme parks, zoos and museums will be cheaper during the summer holidays through a cut to VAT, the chancellor has said.

Rachel Reeves announced a temporary reduction in VAT from 20% to 5% from when schools break up in Scotland at the end of June until children return to classrooms in England, Wales and Northern Ireland on 1 September.

The discount, which will be up to businesses to pass on to customers, will also apply to children's entry to cinemas, soft play and theatres, as well as children's meals in restaurants and cafes.

The VAT cut was part of a flurry of government policy announcements aimed at easing cost of living pressures.

As well as the cut in VAT on tickets for family days out, the chancellor announced free bus journeys for under-16s in England in August and cuts to import taxes on some basic foods under a "Great British Summer Savings" campaign.

"I recognise that what matters for families is not just getting by, but being able to enjoy time together without worrying about the next bill," Reeves said, adding it was also about supporting the hospitality sector.

The scheme announcement comes as households are experiencing rising fuel prices at the pumps, and are bracing themselves for higher energy and food bills due to the war in Iran disrupting supply chains.

It is also an attempt by the government to wrestle back control of the political agenda as the uncertainty surrounding the Prime Minister's future continues.

Helen Miller, director of the Institute for Fiscal Studies think tank, said the measures would lead to some savings, but estimated they would equate to an "average saving of around £10 per UK household".

Value added tax, or VAT, is the tax people have to pay when buying goods or services. The standard rate of VAT in the UK is 20%, with about half the items households spend money on subject to this rate.

The reduced rate to 5% this summer will apply to:

Children's menu meals served in restaurants for consumption on the premises

Children's and family tickets for cinemas, theatres, concerts, shows and exhibitions

Admission tickets for both children and adults for attractions including amusement parks, fairs, museums, zoos, soft play centres, circuses, adventure parks, nature reserves, wildlife parks and observation attractions

As well as the VAT reduction, a series of other measures have been announced in recent days to try to ease rising prices on households and will cost about £1.8bn, according to the Treasury.

When it comes to food biscuits, chocolate, dried fruit and nuts are among more than 100 products which will see targeted cuts to import charges on food from overseas. The full list of products included in the measures will be published next week.

The government hopes suspending such tariffs will reduce pressure on food price rises, but there is no guarantee that the products will become cheaper.

The cost of a weekly shop is expected to rise in the coming months as higher energy prices are passed through supply chains.

Asked on the BBC's Today programme how much the price of a tin of baked beans could fall through suspending tariffs, Chief Secretary to the Treasury Lucy Rigby said: "We can't be exact about that, because obviously it's about how supermarkets set their pricing."

'Positive step'

UK Hospitality, which represents such businesses, said the VAT cut was a "positive step" to help families "enjoy a great British break this summer".

The industry body's chair Kate Nicholls suggested the move should be "viewed by government as a down-payment on a wider shift to a lower VAT rate for the entire hospitality sector, to bring us in line with Europe".

Major cinema company Odeon said it was "excited that our guests will be able to enjoy the big screen for less" over the summer.

Figures released on Thursday revealed UK business activity declined for the first time in a year, according to the closely-watched purchasing managers' index (PMI) survey, driven by weaker confidence among consumers and firms.

But Dame Clare Moriarty, chief executive of Citizens Advice, said although the government's measures on the cost of living would make a "real difference", it was not what people were struggling financially with now, such as energy debt.

"The people coming to us every 30 seconds in crisis aren't just worrying about August, they're already struggling now and fear things will only get worse as winter hits," she said.

The TUC union also said the government needed to be "bolder" to shield workers and households from the impacts of the Iran war, while the right-leaning Taxpayers Alliance suggested if Reeves wanted to ease the cost of living, "she should start by lowering Britain's crushing tax burden".

On Wednesday, the government announced it would extend the 5p cut to fuel duty to the end of the year, instead of phasing it out in September.

Targeted support has also been set out in the form of a 12-month road tax holiday for HGVs, a cut on the tax added to red diesel for farmers and the rail freight industry, as well as a 10p per mile increase in tax free mileage rates for people who drive for work.

The chancellor also said she would change how companies are taxed in relation to their overseas business to increase tax revenues, arguing "some oil and gas groups that operate overseas through foreign branches have structured their tax affairs in a way which ensures they pay little or no corporation tax on their UK energy trading profits".

However, Mel Stride, Conservative shadow chancellor, responded to Reeves's statement saying if she "serious about the challenges we face, she would commit to getting spending down, tackling the benefits bill, getting taxes down to strenghen our economy".

Olly Glover, Liberal Democrat transport spokesperson, said free bus travel for children this summer was welcome, but added "the government must go further to ease the burden on everyone". He called for an "emergency transport package" to cut the current bus fare cap from £3 to £1, to reduce rail fares by 10%, and knock 10p off fuel duty.

Meanwhile, Dr Ellie Chowns, leader of the parliamentary Green Party, said if the chancellor needed to "think far beyond a 'summer savings scheme' which does nothing to address soaring energy bills, sky-high housing costs, and crumbling public services".

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