What does the Autumn 2026 budget it means for your hospitality business

Hospitality got some good news on Wednesday. Thousands of smaller venues will stop paying business rates altogether, and there’s no new tax on wages.

There’s also a 3.9% rise in the wage floor from April 2027. For a sector where staff costs are the biggest line on the P&L, that’s the number to plan around.

Here’s what Chancellor John Healey announced, and what it means for your venue, your team and your tronc.

Business rates – a big win for smaller venues

This is the headline for hospitality. Small Business Rate Relief for retail, hospitality and leisure is getting a lot more generous.

• The threshold rises from £12,000 to £18,000 rateable value.
• Around 70,000 more businesses will pay no business rates at all. The government says that’s about half of all shops, restaurants and gyms.
• Larger venues in the sector get a real-terms freeze on rates for 2 years, so no above-inflation rises.
• Pubs, clubs and music venues keep the 20% business rates cut already announced for April 2027.

If your venue’s rateable value sits between £12,000 and £18,000, check your bill. You could be paying nothing from next year.

Wages going up 3.9% from April 2027

The National Living Wage and National Minimum Wage both rise by 3.9%. That takes the wage floor above £13 an hour for the first time.

The rise goes further than your lowest-paid staff. Supervisors and chefs paid a little above the minimum will expect their differential to hold. Overtime, holiday pay and pension contributions all go up with it.

One thing that hasn’t changed is that tips, gratuities and tronc payments still can’t count towards minimum wage. Tips cannot be used to get staff over the minimum and living wage thresholds, so wage rises will need to be on base salaries.

Duty, VAT and National Insurance

Alcohol duty rises with RPI inflation from 1 February 2027. Reports put that at around 2p on a pint. Small brewers and cider makers get £10m a year in extra relief from the same date.

VAT stays at 20%. The sector’s call for a 10% hospitality rate didn’t make it into the speech.

National Insurance is unchanged. There are no tax rises on wages, and employer NICs stay at 15%. After the shock of the 2024 Budget, that’s welcome stability for payroll budgets.

Machine games duty rises from 20% to 25% on higher-stakes machines, but the government says pubs are protected.

Payroll changes on the way

Three more announcements will affect your payroll, though none of them start straight away.

Employment expenses (from 6 April 2028)

The £2,500 threshold that sends employees to Self Assessment to claim their expenses is going. Employees will be able to claim tax relief through PAYE instead, which should make it simpler for your team to get back what they’re owed. The devil, as always, will be in the detail, and that hasn’t been published yet.

Direct Debit for PAYE and VAT (from April 2029)

All PAYE and VAT liabilities will have to be paid by Direct Debit. If you pay HMRC by bank transfer today, plan the switch early, and make sure your cash flow can handle HMRC collecting on the due date.

Enterprise Management Incentives (from 6 April 2027)

The value of tax-advantaged share options an employee can hold under EMI doubles from £60,000 to £120,000. For growing hospitality groups, that makes share options a stronger way to keep hold of key people.

What to do now

1. Check your rateable value. If it’s between £12,000 and £18,000, you could drop out of business rates altogether.
2. Cost the wage rise properly. Model April 2027 pay across the whole team, including differentials, overtime and pension contributions.
3. Keep tips out of minimum wage. Make sure basic pay alone covers the new rates, with tronc on top.
4. Review your tronc scheme. A properly run tronc stays free of National Insurance for employer and employee. With wage costs rising, that saving matters more than ever.
5. Watch for the detail. Youth and apprentice rates and the start date for the new rates relief will follow in the Budget documents.

Tips+Troncs runs independent tronc schemes for hospitality businesses, so tips are shared fairly and stay compliant. If you’d like a second pair of eyes on your tronc before April, get in touch.