Taxes to be cut on certain goods and activities – how could cost of living package help you?
A temporary VAT reduction on family activities will take effect in late June to boost summer spending while tariffs on certain food products will be reduced.
Daniel Hilton
Households could benefit from cheaper food, days out, and restaurant trips this summer after the government stepped in with cost of living measures.
The VAT rate on certain leisure activities and children's meals will be temporarily reduced and children will be able to access free bus travel. Additionally, the government is aiming to make people’s grocery shopping cheaper by suspending tariffs on more than 100 different foods sold in supermarkets.
It comes as inflation remains high and is predicted to increase further due to the conflict in the Middle East
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Oil and wholesale energy prices have been rising since the Iran war began on 28 February, leading to a 17% hike in the average energy bill from July, and soaring petrol and diesel prices.
With the “Great British Summer Savings” scheme, the chancellor is trying to get families out and about this summer by cutting costs.
Chancellor Rachel Reeves said: “Whether it is a fun day out, a family meal or taking advantage of the thousands of amazing attractions across the UK, Great British Summer Savings will support families with the little treats in life while boosting business across the UK.
“This comes on top of support we’ve already put in place including freezing fuel duty, taking off £117 off energy bills, freezing prescriptions, fuel duty and rail fares.”
The scheme is estimated to cost about £300 million.
Summer VAT cut
From 25 June to 1 September 2026, a reduced 5% rate of VAT (down from 20%) will apply to services in England, Wales, Scotland and Northern Ireland including children’s meals served in restaurants, as well as children’s and family tickets for cinema, theatre, exhibitions, shows and concerts.
The cut will also be applied to admission tickets for both children and adults to a range of attractions, such as amusement parks, fairs, circuses, museums, zoos, adventure parks, soft play and observation attractions.
The Treasury confirmed to MoneyWeek that adults without children can still access the savings on attractions.
The idea is that people can get out and spend money in the economy at a cheaper rate, as long as businesses pass on the VAT savings.
If a business chooses to pass on the full VAT savings, a family of two adults and two children could get £9 off tickets to the circus, £17 off tickets to a wildlife park and £20 off tickets to a theme park, according to the Treasury.
Free bus travel
Throughout August, all children aged five to 15 in England will be able to travel for free on any local bus service.
The Treasury said this will help more families access summer activities while reducing pressure on household budgets.
This is good news for people living outside London. Those in the capital can already get free travel on the London Underground using a five to 15-year-old zip card.
Price cuts for supermarket essentials
The prices of certain supermarket staples are set to fall this summer after the government announced it will cut some tariffs (taxes paid when importing goods) on more than 100 goods.
The tax cuts are expected to save consumers more than £150 million a year, according to figures from the Treasury as part of the Summer Savings initiative.
The package includes cuts to fruit, oils, avocados, bread, pizzas, and olives.
Prices on some sweet treats will also be reduced, including chocolate, gingerbread, biscuits, marzipan, and waffles.
A full list of the goods can be found below:
Will the cost of living measures help you?
Cheaper days out will be attractive to anyone.
But there is no requirement for businesses to pass on the full VAT savings so the actual benefit may depend on the attraction.
Similarly, it will be up to supermarkets to pass on the savings to customers of suspended food tariffs, which Reeves said she expects to be done in full.
Charlotte Kennedy, chartered financial planner at Rathbones, highlights that these measures are rightly aimed at limiting price rises in areas of inflation that are often unavoidable for many households, such as food and travel.
But she warned: “While any targeted support will be welcomed by many households, the impact of rising prices is unlikely to be felt evenly. Lower-income families and those already spending a larger share of their income on essentials may continue to face significant pressure on household budgets.
“It is also worth remembering that everyone experiences inflation differently, depending on their individual spending habits.
"As such, it remains important to keep a close eye on your finances to maintain financial resilience. This may include reviewing regular outgoings, prioritising high-interest debt repayments where possible, and building up a rainy-day fund – with three to six months’ worth of living expenses often considered a good rule of thumb.”
Some other cost of living relief measures are already in motion, with the Treasury extending the fuel duty freeze until the end of 2026. It was due to be phased out from September.
Meanwhile, Reeves has said she is looking at targeted support for households that will struggle to pay their energy bills.
