The Government announced last month that VAT would be reduced from 20% to 5% on children’s meals over the summer, with the Treasury confirming to the MA that pubs are included in the measure.
The reduction will run from 25 June to 1 September and applies to children’s meals supplied for consumption on the premises as part of catering services.
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However, HMRC has clarified the determining factor is how the meal is marketed, presented and priced, rather than who buys or eats it.
This means a children’s meal sold to an adult could still qualify for the reduced VAT rate, provided it is clearly held out for sale as a children’s meal.
Operators will not be expected to verify the age of customers ordering from a children’s menu.
Product based test
HMRC said eligibility depends on whether the product is clearly designed and sold as a children’s meal. In practice, operators should look at menus, pricing, naming, presentation and how the item is advertised.
The MA understands businesses should maintain clear evidence, including menus, descriptions and pricing, to show how qualifying items are marketed.
Operators can still choose to restrict children’s meals to younger diners as a commercial decision, but for VAT purposes the reduced rate depends on the nature of the product rather than the age of the customer.
This means pubs do not need to check whether the person ordering or consuming the meal is a child in order for the VAT cut to apply.
What qualifies?
- A meal is likely to qualify if it appears on a distinct children’s menu, is clearly branded as a children’s option and is priced or packaged with children in mind.
- Meals supplied for a single inclusive price, such as a main, drink and dessert, can qualify for the reduced rate across the full package.
- A non-alcoholic drink supplied as part of a children’s meal can also qualify.
- However, separately priced optional add-ons, upgrades or items from the main menu remain subject to their usual VAT treatment.
- Takeaway meals are excluded from the reduced rate.
What does not qualify?
- The reduced rate does not apply to meals that are simply marketed as smaller portions, lower calorie options, discounted adult meals or shared meals intended for both adults and children.
- Portion size or price alone is not enough to make a dish a children’s meal.
- The guidance also excludes meals that include an alcoholic drink, which will not normally be regarded as a children’s meal.
This has led some operators to warn the policy could miss pubs that are family friendly but do not operate traditional children’s menus.
Ayesha Kalaji, chef patron of Queen of Cups in Glastonbury and Estrella Damm Chef of the Year, previously told the MA she did not offer a separate children’s menu and was therefore “immediately excluded from any aid”.
Cheshire Cat Pubs & Bars owner Tim Bird also described the policy as a “token gesture”, while other operators said the benefit would be limited where children’s meals make up only a small proportion of sales.
Operational complexity
For pubs that do operate children’s menus, the clarification may remove some concern around age checks and customer eligibility.
However, operators will still need to ensure till systems, menus and accounting processes can separate qualifying children’s meals from standard rated items.
The measure may also create questions around whether savings are passed on to customers, retained by operators or used to support existing family offers over the summer holidays.
The issue was spoken about in the Lock In’s ‘Is kid’s meal VAT cut worthwhile?’ podcast episode, where editor Ed Bedington discussed the reduction with co host Heath Ball and Great British Pub Awards Family Pub of the Year operator Phil Sutton of the Perry Hill Pub.
Wider VAT pressure
The clarification comes as pressure builds across hospitality for broader VAT reform.
Celebrity chef and pub operator Tom Kerridge has this week launched the #VATsTheProblem campaign, calling for VAT across hospitality to be cut to 10%.
The campaign, backed by UKHospitality, BBPA, British Institute of Innkeeping and CODE Hospitality, is urging the sector to support a petition aiming for 1m signatures.
Kerridge has argued the current 20% VAT rate leaves UK hospitality at a disadvantage compared with European markets, where rates are typically lower.
The campaign adds further weight to operator calls for the children’s meal measure to be treated as a first step, rather than a narrow, temporary intervention.
For pubs, the important point is that the cut applies to the meal, not the customer, with operators needing to look at how the item is listed, priced and sold, rather than who ends up eating it.
