Britain looks to boost tourist spots with temporary summer tax cut

LONDON - British finance minister Rachel Reeves on Thursday announced a temporary cut in value-added tax for tourist venues over the summer to reduce costs for families, one of a range of measures aimed at relieving some of the economic fallout from the Iran war.

With Prime Minister Keir Starmer under intense pressure from challengers within his Labour Party, Reeves unveiled a temporary cut in the rate of VAT for attractions including theme parks, zoos and museums to 5% from 20% between June 25 and September 1.

The tax cut will also apply to children's tickets for cinemas and theatres as well as their restaurant meals, and Reeves also said bus travel would be free for children under 15 in August.

Reeves told parliament that the move would "help families and support our hospitality sector".

HOSPITALITY SECTOR SAYS TAX CUT SHOULD BE EXPANDED

Kate Nicholls, the chair of industry group UKHospitality, welcomed the move "as the quickest and simplest way to lower prices and boost consumer confidence", and urged that it be extended to holiday accommodation and eventually turned into a permanent tax cut for the whole sector.

U.S.-Israeli strikes on Iran in February have driven up energy prices, dealing a blow to Starmer's efforts to help households struggling with the cost of living.

As part of the package of measures, Reeves also said that Britain would suspend import tariffs on dozens of types of food products including biscuits, chocolate and nuts.

"I expect supermarkets to pass these savings (from tariff reductions) on in full to their customers," Reeves said after a row over whether retailers would face price caps on key goods, adding she urged supermarkets to "do all they can to keep prices low".

She said the measures would be paid for by an acceleration of planned changes to the way Britain taxes international oil and gas groups.

POTENTIAL TEMPORARY SUPPORT FOR BUSINESSES

Britain's regulated utility bills and previously announced measures to lower energy costs for households helped to keep a lid on inflation in April, but price growth is expected to rise to around 4% in the coming months.

Reeves indicated that she may act again if the energy crisis continues into the winter, saying she had been "leading cross-government contingency work on design of potential future targeted and temporary support for businesses".

"We stand ready to act if (energy) market conditions worsen significantly later this year," she told parliament.

She said that the chemicals and ceramics industries - major energy-intensive sectors - would get support packages, after a survey showed earlier on Thursday that British companies are suffering their most widespread drop in activity in over a year.

The government said on Wednesday that a cut in fuel duty for transport, which had been due to expire in September, would be extended to the end of the year, alongside other measures to help hauliers and drivers. It previously set out a £53 million ($71.25 million)package for households which rely on heating oil.

($1 = 0.7439 pounds)

(Reporting by Alistair Smout and Muvija M, additional reporting by Sarah Young and Sam Tabahriti; Editing by Emelia Sithole-Matarise)

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This story was originally published May 21, 2026 at 8:13 AM.