Rachel Reeves will cut VAT to 5% on summer attractions such as theme parks and soft play centres during the school holidays as she aims to ease the impact of the war in Iran on cash-strapped households.<\/p>\n
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.<\/p>\n
Cutting VAT from 20% to 5% during the summer on tickets for attractions and children\u2019s meals is part of a scheme that Reeves is calling \u201cGreat British summer savings\u201d. It will also include free bus rides<\/a> for under-16s in England during August.<\/p>\n The chancellor said zoos, museums, theme parks and soft play venues would benefit from the temporary VAT reduction, which will also apply to children\u2019s theatre and cinema tickets and kids\u2019 meals eaten in restaurants.<\/p>\n Giving examples of the scheme\u2019s potential impact, the Treasury said that if the companies involved passed on the VAT savings to their customers, it could cut \u00a31.50 off the cost of a child\u2019s cinema ticket, or \u00a317 off a family day out at a wildlife park.<\/p>\n 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.<\/p>\n In other cost-cutting measures, Reeves confirmed she was postponing the fuel duty increases<\/a> that were due to take effect in September and December.<\/p>\n The chancellor also said she would suspend import tariffs on some foods, including chocolate and biscuits,adding: \u201cI expect supermarkets to pass these savings on in full to their customers.\u201d<\/p>\n A more ambitious scheme that would have seen supermarkets commit to fixed prices for staple foods<\/a> in exchange for the government easing regulatory burdens was rejected by retailers.<\/p>\n 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 \u201cthose who need to drive for work, from care workers to plumbers\u201d.<\/p>\n The costs of Great British summer savings will be partly met by changes to the \u201cforeign branch profits\u201d regime, which determines how multinational oil firms pay tax on their UK operations.<\/p>\n \u201cWe must ensure that those who benefit from increased prices and volatility pay their fair share,\u201d Reeves said. \u201cCurrently, 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.\u201d She suggested the shift would raise several hundred million pounds.<\/p>\n Reeves kicked off her statement by underlining the strength of the economy before the Iran conflict hit. She said the latest official figures<\/a> showed the UK economy was the fastest growing in the G7 in the first quarter of the year, at 0.6%.<\/p>\n \u201cWe have the right economic plan, but the conflict in the Middle East poses a significant challenge to the world\u2019s economies, including our own,\u201d she said.<\/p>\n Reeves declined to say how she expected to support families in the upcoming winter, when utility bills are expected to rise sharply, but she restated her intention to ensure any such scheme would be \u201ctargeted and temporary\u201d.<\/p>\n