Autumn Budget 2025

The UK’s Autumn Budget 2025, delivered by Chancellor Rachel Reeves, has already triggered strong reactions across our industry. While several measures will reshape the financial landscape for operators, one line in particular caught our attention and has quickly become a flashpoint in the wider debate about labour costs and the hospitality workforce.

The BBC summarised business concerns this way:

“Some businesses – especially in the hospitality sector – are warning that the chancellor’s decision to accept a recommendation to increase the minimum wage for 18–20-year-olds by 9.5% to £10.85 an hour from April could put companies off hiring young people.”

It’s a powerful quote, but it also risks oversimplifying the longstanding challenges facing the hospitality industry. To understand the real implications for venues, we need to look at the budget as a whole: what’s changing, why it matters, and how we should respond.

Below, we break down the key policy shifts and offer a view that’s grounded both in industry reality and in the belief that a stronger, fairer hospitality workforce is the best long-term path forward.

‍

1. Dividend Tax Increases: A Direct Hit to Owner-Operators

From April 2026, dividend tax rates will rise by 2 percentage points.
This matters for many venue owners who rely on dividends rather than salary.

For small operators, particularly those running single or two-site venues, this will likely require a rethink of remuneration planning. The rise doesn’t fundamentally alter the viability of limited-company ownership, but it does tighten margins for those who already face increased borrowing costs and inflation-driven pressure from suppliers.

What operators should do now:

• Revisit tax planning with an accountant
  
  
• Model the impact on take-home income
  

• Consider whether a salary–dividend split still makes sense
  
  

2. Minimum Wage Rises: The Price of Employee Longevity. 

From April 2026, minimum wage changes take effect:

• 21+ rate: £12.21 → £12.71 (+4.1%)
  
  
• 18–20 rate: £10.00 → £10.85 (+9.5%)
  
  

The hospitality industry employs a significantly higher share of 18–20-year-olds than most other sectors. Bar staff, floor teams, KPs, hosts, receptionists, event support – these roles are disproportionately filled by younger workers.

So yes, the cost impact will be real. But the idea that increasing wages for young workers will discourage hospitality businesses from hiring them doesn’t reflect the deeper structural issue.

The real challenge isn’t that young workers are too expensive, it’s that too few young people see hospitality as a long-term career.

This is a generational challenge:
Employees don’t view hospitality today the way they did 15 years ago. The sector’s reputation for inconsistent hours, relatively low pay, and limited progression has pushed many towards retail, logistics and customer support instead.

Fair pay reduces churn, and churn is more expensive than wage increases.

High turnover means constant rehiring, retraining and onboarding.
Churn destroys team cohesion and service quality.
Churn forces operators to continually restart the same processes.

A slightly higher wage that encourages a young worker to stay 12 months instead of 3 saves far more money than it costs.

Bringing youth wages closer to the adult rate is a long-term investment in skills.

The UK has long lagged behind countries like France, Italy and the Nordics in recognising hospitality as a skilled profession.
Reducing pay gaps between age groups encourages young staff to see the industry as a place to build expertise, not simply a university-adjacent stopgap.

And let’s not forget: when wages rise, local spending rises including spending in venues.

Hospitality’s customer base overlaps heavily with the very people receiving these wage increases.

• More disposable income for low- and middle-income groups creates economic activity.
• Money earned in hospitality often gets spent in hospitality.
• A strong local hospitality economy requires strong local consumers.

3. Permanent Lower Tax Rates for Hospitality Properties: A Boost That Deserves More Attention

One announcement that didn’t dominate headlines – but matters hugely – is the introduction of a permanently lower business tax rate for hospitality, retail and leisure properties.

For eligible venues, this is meaningful relief.
It helps offset rising wage costs and gives operators greater long-term stability.

This is precisely the kind of policy hospitality has been calling for:

• recognises the sector’s role in local economies
  
  
• acknowledges the tight margins venues operate under
  
  
• supports physical spaces where communities gather, celebrate and work
  
  

Operators should check immediately whether their venue qualifies.
For many, the tax reduction will soften the impact of higher staffing costs.

4. Sugar Tax Expansion: A Minor but Notable Shift

From 2028, the soft drinks levy will expand to include:

• pre-packaged milkshakes
  
  
• flavoured milk drinks
  
  
• ready-to-drink lattes
  
  

For most venues, this won’t be transformative as it applies only to pre-packaged drinks.
But for businesses with bottled coffee or iced drink ranges, margins may require a second look.

5. What All This Means for Venues

The Budget creates a more complex environment, but also a more stable, better-shaped one.

Short term: pressures rise

• Higher youth wage costs
  
  
• Increased dividend tax for owner-operators
  
  
• Small drinks-related tax changes
  
  
• Inflation still feeding through supplier chains
  
  

Medium to long term: opportunities open up

• Better-paid young workers mean stronger recruitment pipelines
  
  
• Lower hospitality property taxes reduce long-term fixed costs
  
  
• A more stable workforce strengthens service quality
  
  
• Higher disposable income boosts local spending
  
  
• Levelling youth and adult rates improves retention
  
  

The key takeaway:

This budget nudges the sector toward a model where hospitality jobs – especially entry-level roles – are more attractive, better-paid, and more likely to retain talent.

Yes, this comes with cost challenges.
But the alternative, a race to the bottom on pay, with constant hiring churn, has already proven more damaging.

6. How Operators Should Respond

Over the next 6–12 months, venue operators should:

• Reforecast wage spend for 2026 and beyond
  
  
• Review pricing strategy to reflect new cost bases
  
  
• Assess eligibility for hospitality-specific property tax cuts
  
  
• Invest in retention to counteract wage-driven turnover risks
  
  
• Strengthen training and progression pathways to attract young talent
  
  
• Revisit long-term staffing models with a focus on stability
  
  
• Work with accountants on dividend planning and corporation tax strategy
  
  

The most resilient venues will be those that treat wage increases not as a setback — but as an opportunity to build a stronger, more capable workforce.

Final Thoughts

The Autumn Budget 2025 signals a shift: towards higher wages for younger workers, lower fixed-tax burdens for hospitality premises, and a more balanced approach to how different parts of the economy contribute.

Some operators will understandably feel pressure.
But we believe the long-term story is positive.

Hospitality’s success has always depended on people — their skills, passion, consistency, creativity and resilience. Investing more in young workers isn’t a threat to the sector’s future. It is the sector’s future.

And if we play this right he hospitality industry can come out of this stronger, more sustainable and more competitive than before.