This article covers everything chancellor Rachel Reeves had to say about retail and leisure in the autumn budget.
Budget highlights
The Chancellor details that the budget will raise taxes by £40 billion.
Economy forecast
The Office for Budget Responsibility (“ORB”) has forecast that the UK economy will expand by 1.1 per cent this year, 2 per cent next year and 1.8 per cent in 2026.
The OBR has also forecast that inflation will average 2.5 per cent this year and 2.6 per cent next year, before falling to 2.3 by 2026.
Minimum wage (NMW)/National Living Wage (NLW)
The National Living Wage will increase by 6.7 per cent from £11.44 an hour to £12.21 for those aged 21 and over. A gradual move to a single adult rate will also come into play, increasing the minimum wage for those under the age of 21 by 16.3 per cent to £10 an hour.
Fuel duty
Fuel duty has been frozen once again and the temporary 5p cut per litre has been extended for another year.
National Insurance
The headline rate of National Insurance for employers has been increased from 13.8 per cent at present to 15 per cent from April next year.
The earnings thresholds at which employers start making National Insurance contributions has also been lowered from £9,100 to £5,000.
Capital gains tax
Capital gains tax (CGT) will be raised from 20 to 24 per cent on the sales of shares and other assets.
Inheritance tax
The freeze on the inheritance tax threshold of £325,000 has been extended until 2030. Inherited pensions will be captured under the inheritance tax regime for the first time from 2027. The Chancellor has also introduced inheritance tax at 20% on agricultural land and business worth more than £1 million.
Alcohol and tobacco
Draft duty will be cut by 1.7 per cent, taking one pence off the price of a pint in the pub. Duty on hand-rolled tobacco will be increased by 10 per cent.
Vaping
A tax on vaping to discourage non-smokers and young people will be introduced at £2.20 per 10ml of liquid, plus a one-off tobacco duty rise to keep the incentive to choose refillable vaping over smoking.
Non-dom tax regime
The non-dom tax regime permitting foreign nationals living in the UK to avoid paying tax on their overseas income has been abolished.
Stamp duty
The stamp duty surcharge on second homes has been raised by 2 percentage points to 5 per cent from tomorrow.
Private schools
The exemption from VAT on private school fees will be scrapped from January and business rates on fees will be introduced from April.
Income tax threshold
The freeze on income tax thresholds will not be extended and will be uprated in line with inflation for the 2028-29 tax year.
Stamp duty
There will be a rise in stamp duty from 3 to 5 per cent for people who own second homes.
Air passenger duty
An air passenger duty of £2 per passenger on an economy short-haul flight, with those flying on private jets facing an increase of 50 per cent, equating to a bill of about £450 per passenger on a private jet.
Windfall tax
The windfall tax on oil and gas profits will be increased to 38 per cent.
Education
£2.3 billion increase in core schools’ budgets from next year and £300 million for further education.
NHS
£22.6 billion increase in the day-to-day budget for the health service has been promised, alongside a £3.1 billion rise in the capital investment budget for this year and next year, working towards the objective of reducing appointment waiting times to no longer than 18 weeks.
Defence
Increase to the Ministry of Defence’s budget of £2.9 billion next year.
Post Office and blood scandals
The Chancellor has set aside £11.8 billion to compensate those infected and affected by the infected blood scandal and £1.8 billion to compensate the victims of the Post Office Horizon scandal.
National Wealth Fund
Investment of £1 billion will be made available for the airspace sector, £2 billion for the automotive industry and £520 million for a new life sciences manufacturing fund.
Housing
The right to buy discount will be reduced and local authorities will be able to retain more money from sales.
Warm homes
Around £3.4 billion will be made available over next three years to insulate 340,000 homes.
Borrowing rules
The Government’s borrowing rules will be changed to facilitate up to £50 billion on new infrastructure spending.
Retail and Leisure focus
The impact of wage rises will undoubtedly be felt most sharply in sectors such as retail and hospitality where NMW is widely paid. Many employers in these sectors may struggle to maintain pay differentials, with managers earning only a modest amount more than the staff they supervise, resulting in recruitment and retention issues.
Employers proud of paying over the NMW/NLW may no longer be able to afford to do so. There is some suggestion that scrapping the NMW/NLW age-bands may discourage businesses from employing younger workers, who may be perceived to lack experience and will no longer represent a cost-saving.
The increase in employers’ National Insurance may present concern for some businesses. The decrease in the Employment Allowance threshold to £5,000 means that employers will be liable to pay NI for employees earning as little as £100 per week approximately. This will capture many casual and low-hours workers, especially prevalent in retail and leisure sectors.
The decrease in the price of a pint, is likely to be welcomed in R&L sectors.
Helpfully the Government intends, from 2026-27, to introduce two permanently lower tax rates for retail, hospitality and leisure properties, with the intention such is paid for by a higher multiplier for the most valuable properties.
The Chancellor announced that she will provide 40% relief on business rates for the retail, hospitality and leisure industry in 2025-26 up to a cap of £110,000 per business. Alongside this, the small business tax multiplier will be frozen next year.
To support the local high streets and help combat the sharp rise in shoplifting evidence in recent years, the Chancellor detailed she will scrap the effective immunity for low-value shoplifting and provide additional funding to combat organised gangs which target retailers, and to provide more training to police officers and retailers to help stop shoplifting.
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