Ireland will apply the reduced 9% VAT rate to restaurant and catering services, as well as hairdressing services, with effect from 1 July 2026 (with no scheduled expiry date).
The UK will apply a temporary 5% VAT rate to certain family-focused hospitality and tourism supplies from 25 June 2026 until 1 September 2026. Businesses supplying these types of services should begin to prepare for these imminent changes.
Ireland: The VAT rate will reduce from 13.5% to 9% for restaurant and catering (with certain exceptions) and hairdressing services from 1 July 2026.
UK (incl. Northern Ireland): A 5% temporary VAT rate will apply from 25 June to 1 September 2026 for defined children and family-related supplies
Both measures are targeted and limited in scope, increasing the importance of applying the correct VAT treatment.
As announced in Budget 2026 last October, the reduced 9% VAT rate will apply to certain restaurant/catering and hairdressing services in Ireland which are currently subject to 13.5% VAT.
The 9% rate previously applied to these types of supplies on a temporary basis in response to the impact of the Covid-19 pandemic for affected businesses. As was previously the case, certain types of restaurant and catering supplies (e.g. certain beverages) will be excluded from the 9% rate.
In addition, unlike when the previous 9% temporary rate applied, the measure does not apply to accommodation services and admission to tourist attractions - these will typically remain at the 13.5% rate.
This will introduce additional complexity for businesses selling bundles of services (e.g. bed and breakfast) which will become subject to different rates of VAT.
Scope of the Irish VAT rate reduction (High level summary)
| Included (9%) | Excluded (remain at standard or other rate) |
| Restaurant and catering services (restaurants, cafés, hotels, bars, takeaways) | Alcoholic and most soft drinks (23%) |
| Hairdressing services (currently at 13.5%) | Hair care products (23%) |
| Accommodation such as hotels, short-term rentals (13.5%) | |
| Admissions and tourist attractions (depends on exact nature of the attraction but typically 13.5%) |
In the UK, a temporary reduced rate of 5% will apply to certain family-oriented supplies during summer 2026. The relief is time-limited and applies only within the defined summer period.
Scope of the rate reduction
| Included (5%) | Excluded (remain at standard rate or other rates) |
| Children’s meals consumed on premises | Takeaway meals (expected to remain outside scope) |
| Children’s admissions (cinemas, theatres, exhibitions, shows) | General adult admissions |
| Certain qualifying family tickets | Non-family or general tickets |
| Admissions to family attractions (e.g. theme parks, zoos, museums, soft play centres) | Attractions not meeting family-focused criteria |
Businesses impacted by these changes should take steps to prepare ahead of implementation. This should include:
While the headline VAT rate reductions may appear straightforward, the practical application is likely to be more complex, particularly for businesses with mixed or bundled supplies and where transactions straddle the effective dates. Businesses will need to pay particular attention to their systems and processes to ensure the right VAT rate applies on the right date.
Early preparation will help mitigate implementation risks and ensure the correct VAT treatment is applied.
For more information, please contact Glenn Reynolds, David Duffy, David Reaney, Ethna Kennon or your usual KPMG contact.
