Weekly VAT News

Temporary reduced VAT rate for children’s meals, tickets, and family attractions

On 21 May 2026, the government announced that a temporary reduced VAT rate of 5% will apply to the supply of children’s meals, tickets, and family attractions from 25 June 2026 to 1 September 2026. Details are set out in Revenue and Customs Brief 5 (2026), with an accompanying fact sheet. The temporary rate will apply to: certain supplies of children’s meals; children’s and family admission to theatres, cinemas, concerts, exhibitions, and shows; and admission tickets to qualifying attractions suitable for families with children. The reduced rate covers supplies marketed, priced, and presented as intended for children. Children’s meals are those held out for sale only as a meal for children and supplied by a restaurant for consumption on the premises. Children’s admission tickets are those that are held out for sale only as a right of admission for a child. Where a ticket includes the right of admission for a family including children, the reduced rate will apply to the whole ticket. Qualifying attractions include amusement parks, circuses, adventure parks, museums, zoos, wildlife parks, soft play centres, and observation attractions. The reduced rate will apply to admission for all customers, including adults, for qualifying attractions that are suitable for children. The reduced rate does not apply to sport, including charges for spectating and for participating in sport or physical recreation. The government has stated that it “expects qualifying businesses to pass these savings on to families by lowering the prices” paid by customers. (Contact: Andrew Clarke)

Queenscourt Limited: VAT liability of dip pots – UT

In 2019, Queenscourt Limited made a claim for repayment of VAT on the basis that the components of takeaway meal deals sold at its KFC outlets should be treated as separate supplies, and accordingly zero-rated where applicable, which HMRC paid. When Queenscourt submitted a claim in 2020 for following periods, a different HMRC officer determined that dip pots included in the meal deals were part of a single, standard-rated supply alongside the hot food, and rejected the claim and issued an assessment to recoup the VAT previously repaid. HMRC accepted that other components of meal deals, such as coleslaw, cookies, and yoghurt, could be zero-rated. The First-tier Tribunal found that the dip pots formed part of a standard-rated supply of hot food and dips. The Upper Tribunal has now held that the dip pots were separate, zero-rated supplies. In summary, the UT considered that a supply must either be a single supply, with a single VAT liability, or a multiple supply, with each element in a multi-element transaction being considered separately, with its own VAT liability. The UT rejected the FTT’s view that some elements of a multi-element transaction could constitute a single, composite supply (in this case hot food and dip pots), while other elements of the same transaction (coleslaw, cookies, yoghurt) could constitute separate supplies. As HMRC had accepted that meal deals were a multiple supply, the dips were treated as separate, zero-rated supplies. Queenscourt had also argued that it was unfair of HMRC to revisit the original claim, on the basis of legitimate expectation. Given the UT’s findings on the issue of VAT liability, this argument was not relevant to the outcome of the appeal, and the UT left open the question of the FTT’s jurisdiction to hear legitimate expectation arguments in decisions regarding VAT appeals. The UT allowed Queenscourt’s appeal. (Contact: Andrew Roberts)

Planned fuel duty increase cancelled

It was announced at Budget 2025 that the 5p fuel duty reduction, in place since March 2022, was to be reversed in three stages: 1p on 1 September 2026, 2p on 1 December 2026, and 2p on 1 March 2027. The government has now announced that the 5p fuel duty reduction will remain in place until the end of the year. The government also announced a reduction to the fuel duty rate on red diesel from 10.18p to 6.48p from 15 June 2026 until the end of the year and a “12-month holiday” from vehicle excise duty for most heavy goods vehicles. (Contact: Jeffrie Mann)

Plastic packaging tax: mechanically recycled packaging – consultation

There is an exemption from plastic packaging tax (PPT) for packaging containing at least 30% recycled plastic. From 1 April 2027, businesses will be able to use a mass balance approach to calculate the proportion of recycled content in chemically recycled plastics. (A mass balance approach tracks materials through the supply chain and enables recycled or sustainable inputs that are mixed with virgin material during the process to be allocated to particular outputs.) Also, pre-consumer waste will no longer be classified as recycled plastic for the purposes of PPT, and only reprocessed post-consumer plastic waste will be accepted. HMRC have launched a consultation on a potential requirement for UK manufacturers and importers of plastic packaging containing mechanically recycled plastic to be certified in order to claim the PPT exemption, with a view to mitigating against fraud and encouraging consumer confidence. The consultation closes on 10 August 2026. (Contact: Zoe Hawes)

Scottish air departure tax – consultation

Air departure tax (ADT) will be introduced in Scotland on 1 April 2027. ADT is a wholly devolved tax that will replace air passenger duty (APD) in Scotland. Following a consultation which closed on 26 March 2026 and which is still being analysed, Revenue Scotland have written to stakeholders seeking feedback, by way of a survey, on the effective design and administration of ADT. Revenue Scotland are particularly interested in hearing from commercial operators and private/business jet operators with departing flights from Scotland, as well as agents with responsibility for submitting ADT returns. (Contact: Conor O’Brien)