Budget 2026: what changed for hospitality, and what to do now

The Autumn Budget of 28 October 2026 did not cut hospitality VAT, which stays at 20%, and left employer National Insurance at 15%. It did raise the National Living Wage to £13.21 an hour from April 2027, widen business rates relief for small venues in England, increase the relief for pubs, social clubs, and live music venues, and raise alcohol duty with inflation from February. For most independents, the wage bill rises by more than any relief saves. Check your rateable value, rework your April labour budget, and review your prices now.

What did not change

• VAT stays at 20%. The sector campaigned for months for 10%. It did not come. Plan on 20%; any future cut is a bonus, not a business plan.
• Employer National Insurance stays at 15%, with no new relief for hospitality employers.

Business rates: who benefits, and who does not

These changes apply to England. Scotland, Wales, and Northern Ireland run their own rates systems, so check the rules where you trade.

• Small venues. Full small business rates relief now applies up to a rateable value of £18,000, up from £12,000, with tapered relief up to £21,000. Around 70,000 more small businesses will pay no business rates at all. If your café or small bar sits in that band, this is the measure that helps you most.
• Pubs, social clubs, and live music venues. Their relief rises from 15% to 35% from April 2027. The Treasury puts the average saving at more than £3,000 a pub.
• Restaurants, larger cafés, and hotels above the threshold. No new cut. Rates are frozen in real terms for two years, which stops them rising faster than inflation but does not bring them down.

Wages: the cost that matters most

From 1 April 2027:

That is a rise of 3.9%. For a full-time member of staff on 40 hours a week, the extra 50p an hour comes to about £1,040 a year, and about £1,200 once employer National Insurance is added, before pension. Multiply that by your team, and set it against any rates saving. For most food-led venues, the wage rise is the bigger number.

Alcohol duty

Alcohol duty rises with RPI inflation from 1 February 2027. There is £10m a year of extra relief for around 2,000 small brewers and cider makers, which may help some of your local suppliers keep their prices steady, but it is not a cut for pubs or bars. If drinks are a large share of your sales, your costs rise in February.

Put six questions on the goalpost

Before you count any measure as a saving, put six questions to it:

• Who benefits? Every venue, or only small properties, or only pubs?
• What is actually changing? The threshold, the taper, the relief, or the multiplier?
• Why this measure? Its purpose tells you who it leaves out.
• Where does it apply? England only, or across the UK?
• When does it begin? Most of these changes start in February or April 2027, not now.
• How does it change the whole cost base? The net effect of wages, duty, rates, and VAT together, not the most attractive line in the press release.

Three things to do this month

1. Check your rateable value. If it is close to £18,000 or £21,000, find out exactly what you will pay from April, and whether your venue counts as a pub, social club, or music venue for the higher relief.
2. Rework your April labour budget at £13.21. Use your real rotas, site by site, not an average uplift. Then look again at the hours and sessions that do not pay.
3. Review your prices before February and April. Drinks first, ahead of the duty rise, then food, ahead of the wage rise. Small, regular changes now are better than a sudden jump in the spring.

This is general information, not tax advice. Ask your accountant how the changes apply to your business.

Budgets are a weather event, not the climate. The climate is your cost base, your menu, and your team. If you would like help working out what this Budget means for your venue, and what to change first, a Hospitality Health Check is the place to start.