Chancellor says she will raise tax on global oil giants to help meet costs of plans and confirms freeze on fuel duty increasesBusiness live – latest updatesRachel Reeves will cut VAT to 5% on summer attractions such as theme parks and softplay centres during the school holidays, as she aims to ease the impact of the war i
Reeves said the summer attractions that would benefit from the temporary VAT reduction included zoos, museums, theme parks and softplay venues, as well as children’s theatre tickets and meals.
Photograph: Stephen Chung/Alamy Reeves said the summer attractions that would benefit from the temporary VAT reduction included zoos, museums, theme parks and softplay venues, as well as children’s theatre tickets and meals.
Photograph: Stephen Chung/Alamy Reeves cuts VAT on summer days out to 5% as part of cost of living support Chancellor says she will raise tax on global oil giants to help meet costs of plans and confirms freeze on fuel duty increases Business live – latest updates Rachel Reeves will cut VAT to 5% on summer attractions such as theme parks and softplay centres during the school holidays, as she aims to ease the impact of the war in Iran on cash-strapped households.
The chancellor told MPs on Thursday she would also raise more tax from global oil firms operating in the UK, to help meet the costs of her plans.
Cutting VAT from 20% to 5% during the summer on tickets for attractions and children’s meals is part of a scheme Reeves is calling Great British Summer Savings. It will also include free bus rides for under-16s in England during August.
The chancellor said zoos, museums, theme parks and softplay venues would benefit from the temporary VAT reduction, as well as children’s theatre and cinema tickets, and kids’ meals eaten in restaurants.
Giving examples of the scheme’s potential impact, the Treasury said that if the companies involved pass on the VAT savings to their customers, it could cut £1.50 off the cost of a child’s cinema ticket, or £17 off a family day out at a wildlife park.
The temporary tax cut will be in place from 25 June, to coincide with the start of the Scottish school holidays, and continue until 1 September.
In other cost-cutting measures, Reeves confirmed she was postponing the fuel duty increases that were due to take effect in September and December.
The chancellor also said she would suspend import tariffs on some foods, including chocolate and biscuits,adding: “I expect supermarkets to pass these savings on in full to their customers.” A more ambitious scheme that would have seen supermarkets commit to fixed prices for staple foods in exchange for the government easing regulatory burdens was rejected by retailers.
Reeves said she would raise by 10p the tax-free mileage rate for workers claiming back the costs of driving, in a move she said would benefit, “those who need to drive for work, from care workers to plumbers”.
The costs of Great British Summer Savings will be partly met by changes to the “foreign branch profits” regime, which determines how multinational oil firms pay tax on their UK operations.
“We must ensure that those who benefit from increased prices and volatility pay their fair share,” Reeves said.
“Currently, some oil and gas groups that operate overseas through foreign branches have structured their tax affairs in a way which ensures they pay little or no corporation tax on their UK energy trading profits. Today we are putting an end to that practice.” She suggested the shift would raise several hundred million pounds.
Reeves kicked off her statement by underlining the strength of the economy before the Iran conflict hit. She pointed out the latest official figures showed the UK economy was the fastest growing in the G7 in the first quarter of the year, at 0.6%.
“We have the right economic plan, but the conflict in the Middle East poses a significant challenge to the world’s economies, including our own,” she said.
Reeves declined to say how she expected to support families in the upcoming winter, when utility bills are expected to rise sharply – but restated her intention to ensure any such scheme would be, “targeted and temporary”.
The quarterly cap for household gas and electricity prices from July will be set next week, and is expected to rise to around £1,850 , after falling in April as a result of tax changes introduced at Reeves’s budget.
Paul Nowak, secretary general of the TUC, suggested the chancellor would have to go further in the coming months to shield families from the effects of rising inflation.
“Any practical steps to help families with the cost-of-living crisis are a good thing, but we’ve barely begun to experience the economic fallout of the Iran war – and the threat to living standards is going to grow as the war drags on,” he said. “The government will need to be bolder to shield workers and households from Trump’s illegal war.” Reeves also used her statement to announce some support for industries hit particularly hard by rising energy costs, she said, with £350m set aside for a “critical chemicals resilience fund,” to support what she called, “strategically important producers,” and £120m for the ceramics sector.
Manufacturing trade body Make UK welcomed these moves but warned they would not tackle the underlying challenge of high electricity costs.
Verity Davidge, Make UK’s director of policy, said: “This announcement will provide essential support for some key industries to tackle rising energy costs.” However, she added: “Far from protecting national resilience and security, the UK’s continued eye-watering industrial electricity prices risk further deindustrialisation with prices continuing to rise and energy contracts due for renewal at the end of year.” Responding to Reeves, the shadow chancellor, Mel Stride, welcomed the postponement of the fuel duty rise, which the Conservatives have long called for – but attacked Reeves’ handling of the economy.
“Today’s announcements will bring little comfort to the hundreds of thousands of people who have lost their jobs, to the countless businesses that have folded, and to those high streets which are now hollowed out,” he said. “The reality is that we are in a terrible position to deal with the consequences of this latest energy crisis, thanks to the actions that this government has taken.” Explore more on these topics Tax and spending Rachel Reeves UK cost of living crisis Children Travel & leisure Household bills Oil news Share Reuse this content
