The summer reduced rate ends the day after the August bank holiday weekend. For restaurants, soft play centres and family attractions across Wales, that means a second till reconfiguration in ten weeks and a pricing decision that needs making now rather than on the morning it takes effect.
The temporary VAT cut has been the good news story of the season for a lot of Welsh hospitality. Since 25 June, qualifying children’s meals, children’s admission tickets and admissions to family attractions have carried VAT at 5% instead of 20%, under the government’s Great British Summer Savings package.
It ends on 1 September. From Wednesday 2 September, the standard rate applies again across the board, and the operators who handled the first switch cleanly are not automatically the ones who will handle the second.
What has actually been at 5%
The relief is narrower than the headlines suggested, and worth restating before anyone reconciles a quarter’s records.
Three categories qualify: children’s meals consumed on the premises, children’s admission tickets, and admission to family attractions. HMRC has been specific about the first of those. A meal counts only where it is marketed, presented and priced as a children’s meal, which in practice means a dedicated children’s menu rather than a smaller portion of an adult dish. Takeaway is outside the scheme. Alcohol stays at 20% throughout. Sports participation and professional sporting fixtures are excluded.
This was never a discretionary relief either. Where a supply met the conditions, 5% was the correct treatment, not an option. The same applies in reverse from 2 September.
The timing is awkward
The reduced rate runs to the close of trade on Tuesday 1 September. That puts the August bank holiday weekend, one of the strongest trading weekends of the year for the Gower, Mumbles and the Pembrokeshire coast, inside the relief. Two days later, Welsh schools go back, and the rate is 20% again.
So the changeover lands immediately after a high-volume weekend, when tills have been hammered, staff are tired, and nobody wants to be reconfiguring an EPOS system at eight in the morning. Anyone who changed rates on 25 June already has the process documented. The sensible move is to schedule the reverse now, test it outside service hours, and check three things while you are in there: that the children’s menu is still coded as a separate line, that sales reports for 25 June to 1 September remain retrievable after the change, and that any meal deals or discounts spanning both rates still calculate correctly.
Rhys Evans, Director at RNE Accounting, said: “We’re talking to lots of our hospitality clients around what their options are around the rate increase, specifically about raising prices. We saw issues with the rate change in June largely because we were not prepared ahead of the changes, so we are encouraging our clients to be proactive and update EPOS systems ahead of time. If I could tell hospitality owners to do one thing this week, it would be to firm up what your plans are for the rate increase. That way they will not be deciding what path to take, as well as making the practical changes needed, all in one go.”
Advance bookings need looking at individually
What determines the rate is when the admission or event takes place, not when the customer paid. Attractions that took deposits in July for autumn visits, sold gift vouchers over the summer, or accepted bookings for dates either side of 1 September will have cases that need working through one at a time rather than a blanket rule applied across the booking system.
Businesses that refunded the VAT difference on bookings made before 25 June for dates inside the window should expect the same questions going the other way.
The pricing decision is separate from the compliance one
The government encouraged businesses to pass the saving on. Plenty did, and now face the question of whether to put prices back or absorb the difference out of margin.
There is no single right answer, and it is worth running the numbers on your own menu rather than assuming. Holding prices in September, when family trade drops off anyway, may buy less goodwill than it costs. Putting them back the week the schools return may be more visible than doing it quietly a fortnight later. Either way, the decision belongs to the operator and needs making before the rate changes rather than after the first week’s figures come in.
Keep the evidence
HMRC will expect to see how the split was applied if it asks. Menus as they appeared during the relief period, till reports broken down by rate, and any marketing that described the children’s offer are all worth keeping together now, while it is easy, rather than reconstructing them next spring.
Two rate changes in ten weeks is the kind of administrative churn that lands hardest on small independents without a finance function behind them. It is also the kind that produces errors nobody notices until a VAT return is already filed.
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