Autumn Budget 2025: Hospitality & Leisure Sector Predictions & Wish List

The government introduced the Employment Rights Bill to Parliament on 10 October 2024. The Bill introduces various changes to Employment legislation set to change the Employment landscape.  Among the changes include Day One rights, reducing the amount of time employees have to claim unfair dismissal (currently two years); and a ban on exploitative zero hours contracts – both of which will impact on the H&L sector due to the seasonal nature of some roles.  The Bill has been going through Parliament, most recently the House of Lords. Many of the changes are due to come into place in 2026/27. As of now, nothing has been confirmed however employers are advised to keep abreast of the changes and prepare themselves for the changes especially those relating to enhanced Employment rights.  They will need to show a fair reason for dismissing people even within the likely time frame of 9 months as a probationary period.

The chancellor is anticipated to announce reforms to business rates in the autumn budget, in particular a change in small business rates relief which would align with her mission for growth while also easing tax burdens for small businesses. Key proposals include a shift to a marginal tax system where bands are taxed at increasing rates, currently retail, hospitality and leisure businesses are subject to a lower tax rate on properties with a rateable value of less than £500,00 whereas those with properties above this threshold pay at a rate determined by a higher multiplier. These changes could encourage expansion and investment in hospitality and leisure, especially on high streets. Regardless, further clarification on the government’s plans for reductions in business rates would be welcomed as many local investment in jobs and stores are currently being held back until this clarification is provided.

There’s talk (especially from business representatives) of adjusting the VAT registration threshold. Either lowering it to bring more small businesses in or increasing it to reduce compliance burden. The aim would be either to raise revenue or ease burdens on smaller firms. No formal proposal has yet been confirmed but it is likely that the VAT registration will be changed and the budget announcements may provide further details.

Some hospitality, retail, or leisure sector groups are calling for VAT cuts (or reduced rates) to help with inflation, cost pressures, and competition. This could manifest as reduced VAT on certain services (food in pubs, possibly) or targeted relief measures. Whether that will happen depends on fiscal space which as we know is very small. Any relief in this area would be hugely welcomes by clients in the hospitality sector given the very difficult economic environment they are operating in. A reduction in VAT rates for hospitality, retail, or leisure businesses would more closely align with most other European countries.

Wage costs in the sector have increased significantly since the changes to employers national insurance in April. The secondary threshold for employers national insurance was reduced from £9,100 to £5,000 and the secondary class 1 rate increased from 13.8% to 15%, the net revenue anticipated for the changes to National Insurance was just under £24 billion in the 2025/26 tax year. These increased costs have resulted in jobs losses and a deterioration in trading performance for many businesses in particular hospitality, retail, or leisure businesses.  A recognition of the impact these changes and implementation of reliefs would be welcomed. The establishment of the ‘Budget Board’ in early September, tasked with driving growth and maintaining support from both business and the City, may indicate a more pro-business budget where such reliefs are considered.

The UK government is considering extending pub opening hours in England and Wales to boost the hospitality sector and support local economies. The proposed changes would allow pubs to stay open later, particularly on weekends and during major events, aiming to increase footfall and spending. Ministers are consulting with industry leaders and local authorities to balance economic benefits with public safety and community concerns. The move is part of broader efforts to revitalise high streets and support leisure businesses post-pandemic.