Chancellor John Healey delivered his Autumn Budget yesterday (28 October), announcing changes to business rates, the minimum wage, alcohol duty and cost of living support.
Healey said the package would provide 'breathing space on the cost of living and the cost of business', although many hospitality operators have hit back in the last 24 hours. Tommy Banks, chef-patron of the Tommy Banks Group, describes the Budget as 'incredibly frustrating', while Markus Thesleff, founder and CEO of the Thesleff Group, echoed his disappointment in the announcement.
'The higher rates threshold does nothing for businesses of any real size, and nothing in this budget eases the pressure on operators who have seen costs almost double in five years. Add the new employment rules, and the result is simple: businesses can’t afford to hire and can’t risk it, and it is young people and graduates who are paying the price.'
These are the main takeaways for hospitality:
Business rates relief expands
From April 2027, the threshold for Small Business Rates Relief for hospitality, retail and leisure venues in England rises from £12,000 to £18,000. Healey says that will take around 70,000 small businesses out of paying rates altogether, while other eligible venues will see frozen rates until 2028, so their bills rise no faster than inflation.
Pubs, social clubs and most live music venues also get a further 20% off, following the cut announced by Prime Minister Andy Burnham in July, taking their total relief to 35%.
The announcement offers some support to small independents, but as Thesleff points out, a higher threshold does little for larger operators.
When does the measure come into effect? 1 April 2027
Minimum wage to increase by 3.9%
The National Living Wage, the minimum for workers aged 21 and over, will rise 3.9% from £12.71 to £13.20 an hour. For workers under 21, the rate will increase from £10.85 to around £11.27 an hour.
UKHospitality CEO Allen Simpson said the increase is a 'burden that many businesses will struggle to absorb'. He also said it 'will add further pressure for hospitality businesses already grappling with substantial increases in costs.'
When does the measure come into effect? 1 April 2027
Alcohol duty relief introduced
The Budget introduced £10 million a year of alcohol duty relief for small British brewers and cider makers. The relief is aimed at producers rather than venues, so pubs’ main help comes from the business rates changes.
When does the measure come into effect? 1 February 2027
Cost of living support to reduce energy costs
The VAT cut on electricity bills is extended until July, and up to 20 million households will get a one-off £100 Household Energy Payment. Trade press has suggested the extra support could lift spending on eating out over Christmas and New Year, though nothing in the Budget guarantees it.
When does the measure come into effect? From 2027
What wasn't addressed in the Budget?
Two of hospitality’s biggest asks went unanswered. VAT on hospitality stays at 20%, despite the VAT’s The Problem campaign fronted by Tom Kerridge, and the employer National Insurance threshold stays at £5,000.
UKHospitality says the lower threshold makes it costlier to hire young and part-time staff, adding hiring pressure to operators who are already facing mounting costs.
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