A Much-Needed Break for Families in the UK Comes to an End: But How should Businesses React?

September 2, 2026 General

On the 25th June 2026, the VAT rate in the United Kingdom on children’s meals, admission tickets and family attractions was reduced from 20% to 5% until the 1st September 2026. This acted as a much needed, although slightly ambiguous, cost reduction for families during the summer months.

There proved to be some difficulties in determining exactly what fell within the scope of this new reduced VAT rate. Whilst advertising a VAT reduction is not generally prohibited, in this case, whether a particular ticket or “child’s meal” qualified for the 5% reduced rate could have depended on how the attraction or ticket was “held out for sale,” including how it was marketed, priced and presented. Despite the controversy, it has provided a clear example of how VAT can be used for real-life benefits.

However, as the saying goes, “all great things must come to an end”. And in this case, the end is the 1st September 2026 and it is fast approaching, meaning that the temporary 5% reduced VAT rate is soon to revert back to being the standard 20% VAT rate again.

How Should Businesses Prepare for VAT Rate Changes?

 This shows the complexity and ever-changing characteristics of VAT rates. However, what is often overlooked, is the subsequent strain it can put on businesses from a VAT compliance perspective, even where the intention is good. For example:

  • Manually creating a new tax code in SAP in order to account for the new VAT rate change
  • Inputting the applicable implementation and cut-off dates for VAT rate changes
  • Updating condition records
  • Testing across multiple systems
  • Understanding what goods and services fall into what VAT rate
  • Simply staying up to date with VAT rate changes

This can prove to be quite problematic and IT intensive for many businesses. Keeping up with ever-changing VAT rate developments is difficult enough, without the additional problems triggered in standard SAP.

A Forward-Facing Solution

Implementing a dynamic tax determination solution can easily solve this issue. For example, using Meridian’s tax code module you avoid the stress of creating a new tax code in SAP for each VAT rate change. Instead, you simply update the VAT rate linked to a tax code centrally along with the respective validity period which is instantly reflected across you SAP environment which helps businesses easily navigate any VAT rate changes.

If you would like more information on Meridian’s SAP VAT determination tools or our Tax Code Module, or would like advice on any VAT rate changes, please feel free to contact us below for a demo or support.

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