The kids' menu goes back to 20% VAT on 2 September. Set the price now

VAT on qualifying children's meals has been 5% since 25 June. On Wednesday 2 September it goes back to 20%, and that is £119.05 out of every £1,000 those meals take, straight off your margin, unless you move the price. Here is the exact number to move it by, the promotion that quietly cancelled the relief for a lot of cafes, and why these ten weeks are worth more to you as data than they ever were as cash.

What changes, and when

Between 25 June and 1 September 2026 inclusive, VAT on a qualifying children's meal eaten in your cafe is 5% rather than 20%. From Wednesday 2 September it is 20% again.

Nobody has to vote on that. The Order that made the change, SI 2026/576, modifies the VAT Act only "in relation to the period beginning with 25th June 2026 and ending with 1st September 2026". The period runs out and the old rate is simply back.

The same window covers admission tickets to family attractions, which is the bigger half if you charge for entry as well as for food. That is further down.

The number is £119.05 per £1,000

VAT is a slice of the price your customer pays, not something bolted on top of your takings. At 5% it is one twenty-first of the gross. At 20% it is one sixth.

So on £1,000 of children's-menu takings:

• at 5% you hand HMRC £47.62 and keep £952.38
• at 20% you hand HMRC £166.67 and keep £833.33

£119.05 per £1,000 moves from your side of the table to theirs on 2 September, unless you change the price.

To get back to the same take you need a 14.29% rise on those lines. Multiply by 1.2, divide by 1.05. A £6.95 children's meal becomes £7.94.

If you cut prices on 25 June to pass the whole relief on, the cut you made was 12.5%, because 1.05 divided by 1.20 is 0.875. Those two numbers are not the same and it catches people out: a 12.5% cut needs a 14.29% rise to undo it. Put 12.5% back on and you are still short.

Which of these three cafes are you?

You cut the price in June. Your job is a 14.29% rise on 2 September, dated in the till now, and a line on the menu board saying the summer rate has ended. Nobody argues with that one.

You left the price alone. You have quietly kept an extra £119.05 per £1,000 for ten weeks. There is nothing to do on price, but the till still has to change, and see the next section but one.

You are on the Flat Rate Scheme. Nothing happened to you at all. HMRC's brief is blunt: "These changes do not affect the Flat Rate Scheme. If you use the scheme, continue to apply your current percentage." The flat rate for catering, restaurants and takeaways is 12.5%, and has been since 1 April 2022. It did not move this summer.

That last one matters more than it sounds. In 2020, when the government cut hospitality VAT, it also cut the catering flat rate to 4.5% for the duration, so flat-rate businesses got the relief too. This time it did not. So if you are on the scheme and you cut your children's prices to pass on a VAT saving, you funded every penny of it out of your own margin for ten weeks and received nothing back. Put those prices up on 2 September, and if the scheme is still right for you at all, that is a separate conversation worth having with your accountant.

The promotion that cancelled the relief

Kids eat free with an adult main. Kids eat for £1. If that is how you ran the summer, the relief almost certainly never reached you.

HMRC's brief says it plainly: where children's meals are provided free or at nominal cost as part of a single supply of catering, "the entire package will normally be subject to the standard rate". One price, one supply, 20% on all of it.

The relief was written around menu architecture, not around being generous to families. A meal qualified only if it was "held out for sale only as a meal for a child". Its own section, its own price. Smaller portions do not count. Lower-calorie versions do not count. A cheaper version of an adult dish that is not presented as a children's meal does not count. Where the same dish sits on both menus, HMRC expects the children's version to differ by portion, price or both, and says portion size alone will not do it.

Takeaway is out of this relief entirely. That does not automatically mean 20%, because the ordinary takeaway rules still decide the rate, but it does mean the summer change never touched that line.

Worth filing, because there will be another one of these.

If you charge admission as well as food

This is where the real money sat, and most coverage skipped it.

For attractions, the 5% applied to every admission ticket, for every customer, whatever their age. Not just children. The Order lists soft-play centres, indoor bounce parks and indoor play facilities, farm visitor attractions, zoos, aquariums, adventure parks, circuses, fairs, nature reserves, museums and observation attractions.

So a cafe with a play barn, or a farm cafe with a gate charge, has been running 5% on the whole gate for ten weeks rather than on a handful of children's mains.

Put numbers on it. 400 admissions a week at £6.00 across the 69 days of the window is about 3,940 tickets and £23,657 of gross takings. VAT on that at 5% is £1,126. At 20% it is £3,943. A £2,816 swing on the gate, against roughly £285 on a children's menu selling 35 covers a week at £6.95. Both are illustrations on round numbers, not benchmarks, but the ratio is the point: if you sell entry, the entry line is the one to reprice deliberately.

Two catches. Sport never qualified, including admission to sports events, use of sports facilities, and participation in physical recreation. And a pass valid after 1 September only qualified if it cost no more than a single day's entry on its first date, so an annual pass sold in August was standard-rated.

The bit that costs you money whatever you decide

Your till.

If the children's menu is still ringing through at 5% on Wednesday 2 September, you are taking 20% VAT inside the price and declaring 5%. That gap is not your customer's problem. It is yours, and you pay it out of margin when the return is put right. Every £1,000 that rings at the wrong rate is £119.05 you owe and did not put aside.

Worth noting how the government sized this job. Its own impact note calls updating tills, pricing and accounting a "negligible short term impact" with no ongoing cost "beyond the life of this measure". You did it on 25 June. You do it again on 2 September. Ten weeks apart, in your busiest quarter, twice.

What these ten weeks are worth to a buyer

Two things, one useful and one to guard against.

The useful one. A buyer pays a multiple of your earnings, and the biggest single lever on earnings in a cafe is price, which almost nobody tests because testing it feels like gambling with the business. You have just had a price test run for you at the Treasury's expense, on a known date, of a known size, across your busiest ten weeks. Count the covers on that line for the four weeks before 25 June, the ten weeks of the relief, and the first two weeks of September. If you passed the cut on and volume did not move, you have an evidence-backed answer to the question that decides your valuation multiple, and you should stop discounting that line for good. If volume did move, you now know the shape of your own price sensitivity, which is worth far more than the relief was.

The one to guard against. Any trailing twelve months a buyer reads that covers this summer has ten weeks of distorted margin sitting inside it. Buyers normalise what they cannot explain, and they normalise downward: they will read the wobble as discounting, and a point of gross margin taken off is that point multiplied by your multiple taken off the price. Write one line into your management accounts this week, while you still remember it: what you changed, on which lines, on which dates. It costs nothing now and it answers a diligence question later.