The Isle of Man Government has announced a temporary reduction in VAT on selected leisure activities during the summer.

From June 25 until September 1, VAT on children’s meals in restaurants, family tickets to cinemas, theatres and shows, and admission to attractions will be reduced from 20% to 5%, a spokesperson for the government confirmed.

The move mirrors measures introduced by the UK Government which it said are aimed at helping families manage rising living costs during the school summer holidays, while also encouraging spending in the visitor economy.

The Isle of Man shares a customs and excise area with the United Kingdom under the Customs and Excise Agreement 1979, meaning many indirect taxes - including VAT and fuel duty - are aligned with UK rates and policies.

That arrangement means changes announced by the UK Chancellor often have implications for the island, with the Isle of Man Government then confirming how they will apply locally.

The Treasury says the VAT reduction is expected to benefit both families and businesses, with restaurants, attractions and entertainment venues potentially seeing increased footfall during the busy summer period.

The hospitality sector was among the industries hardest hit during the cost-of-living crisis, with businesses continuing to face rising staffing, energy and supply costs in recent years.

Treasury Minister Chris Thomas MHK said: ‘We recognise that household budgets feel the strain from rising costs and continue to monitor and respond to where support is most needed.

‘Cutting VAT on family activities and extending fuel duty support is set to help residents manage everyday expenses while also giving a welcome boost to local businesses during the summer months.’

The government also confirmed that a temporary reduction in fuel duty, first introduced in March 2022, will now remain in place until December 31, 2026.

The measure had been due to expire in September, which would have resulted in a 5p per litre increase in fuel duty for motorists and businesses across the island.

The extension follows an announcement by UK Chancellor Rachel Reeves amid continuing instability in the Middle East, which has created uncertainty in global energy markets and fuel prices.

Meanwhile, farmers and fishermen are set to benefit from a further reduction in red diesel duty from June 15.

The duty rate will fall by more than a third, dropping from 10.18p to 6.48p per litre until the end of the year.

Treasury said fuel remains one of the largest operating costs for the agriculture and fishing sectors, particularly during busy periods involving machinery, harvesting and activity at sea.

Environment, Food and Agriculture Minister Clare Barber MHK said: ‘Fuel costs are a real and significant pressure for our hard-working farming and fishing businesses.

‘This significant reduction in red diesel duty will provide practical support and greater certainty, helping to protect livelihoods and enabling producers to continue contributing to the island’s economy.’

Further details about the temporary VAT reduction and fuel duty changes are available on the Isle of Man Government and UK Government websites.