The UK government is temporarily reducing the VAT rate from 20% to 5% for qualifying children’s meals sold for on-premises consumption (dine-in). This change applies from June 25, 2026, to September 1, 2026 (inclusive) and requires updates to your Lightspeed Restaurant account to make sure qualifying products are taxed correctly.

Start by identifying qualifying products, then choose the setup that best matches your business to configure the following VAT rates for your children’s menu products: 

• Tax Rate (dine-in): 5%
• Takeaway Tax Rate: 20%
• Delivery Tax Rate: 20%

We recommend creating dedicated children’s meal products for most businesses, but the best setup depends on how your menu is currently configured:

• Recommended: Create dedicated children’s meal products.
• Option A: Update an existing children’s meals category.
• Option B: Move products to a dedicated children’s meals category.
• Option C: Configure individual products.

Then, review your setup again when the temporary VAT rate ends.

For more information, refer to HMRC’s guidance on the temporary reduced rate of VAT for children’s meals, tickets, and family attractions.

Identifying qualifying products

Children’s meals

Based on current guidance, a children’s meal generally qualifies when it is:

• Part of a dedicated children’s menu.
• Marketed and sold as a children’s meal.
• Consumed on-premises (dine-in).

Exclusions

The reduced rate doesn’t apply to:

• Takeaway children’s meals.
• Delivered children’s meals.
• Smaller portions of adult meals.
• Adult meals or drinks.
• Meals that aren’t specifically marketed as children’s meals.
• Meals that include alcoholic drinks.

Drinks

For drinks included with children’s meals, keep the following in mind:

• A non-alcoholic drink isn’t required for a children’s meal to qualify for the temporary 5% rate.
• If a non-alcoholic drink is included as part of a children’s meal deal sold for one price, it may also qualify for the temporary 5% rate as part of the same supply.
• Drinks sold separately from the main menu continue to use their normal VAT treatment, even when purchased with a children’s meal.

Recommended: Create dedicated children’s meal products

This is the recommended setup for most businesses. Creating dedicated children’s meal products helps make sure only qualifying children’s meals receive the temporary 5% VAT rate.

Use this option if:

• Children’s meal products also appear elsewhere on your menu.
• The same product can be sold as both a children’s meal and an adult item.
• You use combos or meal deals.
• You’re unsure which setup applies to your business.

For example, if the same Chicken Nuggets product is used on the children’s menu and as an adult side dish, changing its VAT rate to 5% would apply the reduced rate to every sale of that product. Creating a separate Kids Chicken Nuggets product helps make sure only qualifying children’s meals use the reduced rate.

1. Create a children’s meals category

1. In Restaurant Manager, go to Products > Categories.
2. Click Add Category.
3. Enter a category name, such as Children’s Meals.
4. Configure the following tax rates:
   • Tax Rate (dine-in): 5%
   • Takeaway Tax Rate: 20%
   • Delivery Tax Rate: 20%
5. Configure any required course settings, printer templates, or modifiers.
6. Click OK.

2. Create children’s meal products

1. In Restaurant Manager, go to Products > Products.
2. Select the Children’s Meals category.
3. Click Add product.
4. Create a new product for each qualifying children’s meal (for example, Kids Chicken Nuggets, Kids Burger and Chips, and Kids Fish Fingers).
5. Configure pricing and modifiers.
6. Click OK.

Leave your existing adult menu products unchanged.

3. Update combos or meal deals

If you use combos or meal deals, create new combos using the children’s meal products you created.

Don’t update existing adult combos to use the temporary 5% VAT rate unless they only contain qualifying children’s meal products.

Existing combos don’t automatically update when product VAT rates change. Review your combos separately to make sure they use the correct products and VAT rates.

Option A: Update an existing children’s meals category

Use this option only if all products in the category qualify for the temporary reduced rate and aren’t used elsewhere on your menu.

1. In Restaurant Manager, go to Products > Categories.
2. Open the Children’s Meals category.
3. Change the Tax Rate to 5%.
4. Confirm the other tax rates:
   • Takeaway Tax Rate: 20%
   • Delivery Tax Rate: 20%
5. Click OK.

If a product has a manual tax rate that is different from the category tax rate, it won’t inherit the category tax rate. To identify these products, export your product as a CSV file and update their VAT rates separately if needed. If you change a product’s tax rate to match the category tax rate, the inheritance relationship is restored. Future VAT changes for the category will then apply to the product.

Option B: Move products to a dedicated children’s meals category

Use this option only if your children’s meal products are currently mixed with adult meal products, but the children’s meal products aren’t used elsewhere on your menu.

1. Create the children’s meals category

1. In Restaurant Manager, go to Products > Categories.
2. Click Add category.
3. Create a category, such as Children’s Meals.
4. Configure the following tax rates:
   • Tax Rate (dine-in): 5%
   • Takeaway Tax Rate: 20%
   • Delivery Tax Rate: 20%
5. Click OK.

2. Move the products

1. In Restaurant Manager, go to Products > Products.
2. Open a qualifying children’s meal product.
3. Click Move to.
4. When prompted for the tax rate option, select Category.
5. Select the Children’s Meals category.
6. Click Select.
7. Repeat these steps for all qualifying children’s meal products.

Option C: Configure individual products

You can also change VAT rates directly on individual products.

This option isn’t recommended because:

• Products stop inheriting VAT settings from their category.
• Future VAT changes must be applied individually.
• Reverting the temporary VAT change requires updating each product separately.

Reviewing your setup when the temporary VAT rate ends

The temporary 5% VAT rate is expected to end on September 1, 2026, subject to final HMRC guidance. After this date, review any temporary changes you made for this VAT update:

• Qualifying children’s meals are returned to the applicable VAT rate.
• Any temporary categories created for this change.
• Any temporary products created for children’s meals.
• Any temporary combos or meal deals.
• Dine-in, takeaway, and delivery tax rates.

If you used product-level VAT overrides, update those products separately. Products with individual VAT rates don’t inherit changes from their category.

Important legal notes

Please note that Lightspeed does not give tax advice. Any photos, images, graphics, written content, audio, video, files, materials, information, or any other data contained in this help document (the “Material”) are intended to be used solely for educational purposes, and Lightspeed makes no representations or warranties of any kind, express or implied, regarding the accuracy, completeness, or suitability of the Material for any particular purpose. Lightspeed shall not be liable for any errors or omissions in the Material or for any actions taken by you which are based on or informed by the Material. Always consult your tax professional for your specific situation. 

For the full HMRC guidance, visit: gov.uk – Revenue and Customs Brief 5 (2026)