Autumn Budget 2026: What It Means for Hospitality and How to Prepare

Hussein Ahmad of Viewpoint Partners on what the first Burnham Budget is likely to bring, what it almost certainly won't, and what you can do now so that 28 October finds you ready rather than braced.

On Wednesday 28 October, John Healey will deliver his first Budget as Chancellor, barely three months after Andy Burnham walked into Downing Street. So little has leaked that some tax advisers are calling it the least predictable Budget in years. We do know some things: specifically that the rates of income tax, employee National Insurance and VAT won't change, that the public finances are tight, and that the new Chancellor talks warmly about high streets, first jobs and the hand-pulled pint he learned to love behind a North Yorkshire bar. Warm words are not policy, though, and hospitality has heard plenty of them before.

So with no certainty around what to expect, we asked Hussein Ahmad of Viewpoint Partners, our resident hospitality finance expert, to give us his own view. Below you’ll find his predictions, as well as our suggestions as to how you could get prepared, the other measures that could land on your costs, and what the Budget is likely to mean for your customers.

TL;DR

• Don't wait for a rescue: with little political capital and changes to the main tax rates ruled out, a hospitality VAT cut looks very unlikely.
• Plan for costs to keep climbing: energy, interest rates and inflation are all heading up, whatever the Chancellor says.
• The minimum wage is almost certainly going up, most likely to around £13.18 an hour from April 2027.
• Business rates are the one to watch, with a chance that restaurants, cafés and hotels finally get support closer to what pubs have had.
• Employer National Insurance and alcohol duty are both in play, though neither change is guaranteed.
• Customers are feeling better, but with average mortgage rates close to 6% and many households remortgaging off far cheaper deals, they will be watching every pound over the coming months.
• Value will do a lot of the work: set lunches, early evening menus and a little generosity in the room will bring cautious customers back far more reliably than cutting prices.

The wider political context

The detail

Andy Burnham won the Labour leadership unopposed in July, which means he arrived in Number 10 without facing a general election, and Hussein believes that matters more than any single line in the Budget. "The PM is going to need a lot of political capital to make the changes he wants [from a National Care Service to the other big-ticket pledges he has made]," he says, "and cutting the VAT rate or doing something really positive for hospitality, which would in some shape or form be a tax cut, requires a lot of political capital that he may not have."

Burnham's in-tray is already full, from a National Care Service funded partly by changing the pension triple lock from 2030, to a closer relationship with the EU and a sweeping programme of devolution. The money is tight as well: estimates of the government's remaining headroom have fallen to somewhere between £5 billion and £10 billion, while the hospitality VAT cut the sector has campaigned for would cost £12 billion to £14 billion a year.

The effects

The likeliest outcome is a Budget that speaks warmly about the high street but acts through targeted, relatively cheap measures rather than the broad tax cut that would change the economics of every restaurant in the country. That is not nothing, but it is not the reset many operators are hoping for.

How to prepare

• Build your 2027 plans on the assumption that VAT stays at 20%, and treat anything better as upside.
• If a decision such as a new hire, a lease renewal or a refurb genuinely depends on rates or National Insurance, it is worth waiting the fortnight until 28 October.
• Read the Budget documents rather than the speech, because the measures that matter most to hospitality are often buried in the detail.

What isn't going to come from the Budget

The detail

"The cost of living crisis, which is having a significant impact on spending power in restaurants, is unlikely to be meaningfully alleviated by one Budget," says Hussein. "We have to work on the assumption that energy costs will continue to increase, interest rates will go up and there will be inflationary pressures."

"From the conversations I've been having with clients, the general feeling is that there is no outside source of support coming to their rescue. At this point, they feel that they're on their own."

The numbers support him. Three of the Bank of England's nine rate-setters voted for a rise in September, the next decision falls on 5 November, a week after the Budget, and the Bank expects inflation to climb above 4% early next year, driven mostly by energy. There is no price cap on business energy, and the prices hospitality pays its suppliers were still rising in August even as supermarket food inflation eased. It’s currently predicted that food inflation will hit 6% next year, due to the joint effects of climate change and international conflict.

The effects

None of this arrives as a single shock. Instead it creeps into every line of the P&L at once, from energy renewals and protein prices to loan repayments and customers with less to spend, and for a business running on single-digit margins it is the way these increases compound that does the damage.

How to prepare

• Find the end date on your energy contract, start getting quotes early if it renews in the next six months, and make sure you haven't drifted onto expensive out-of-contract rates.
• If you have a variable-rate loan or a refinancing due within the year, talk to your lender before 5 November rather than after it.
• Rebuild your 2027 forecast with inflation at around 4% as your base case, and ask suppliers now what increases are coming.
• Use Christmas trading to rebuild your cash buffer for January and February (read our guide to pricing your menu accurately, including our costing tool, and before reaching for a blanket price rise, read Matt Paice of Chishuru on smarter ways to grow revenue)

National Minimum Wage

The detail

"One specific thing which we can reasonably predict is that there's likely to be an increase in the National Minimum Wage," says Hussein. "It's gone up the last two years, so it's probably going to go up again, and that will put an increased cost pressure on hospitality businesses."

The National Living Wage has been £12.71 an hour since April. The Low Pay Commission expects a rate between £13.02 and £13.34 from April 2027, with a central estimate of £13.18, and will make its formal recommendation this month, with the new rates normally confirmed around the Budget. The government also remains committed to bringing the rate for 18 to 20 year olds into line with the adult rate, though the timing is not yet set.

The effects

On the central estimate, a full-time member of staff on the National Living Wage working 40 hours a week would cost around £1,124 more a year once employer National Insurance is included, before pensions and holiday pay. Each rise at the bottom also squeezes the gap to the supervisors and chefs de partie just above, and most operators find they have to lift those wages too.

How to prepare

• Model all three scenarios, £13.02, £13.18 and £13.34, across your whole payroll, including National Insurance, pensions and holiday pay.
• Decide now how you will handle pay differentials, and tell your team that a review is coming and when, without promising a rate until it is confirmed.
• Check that payroll is applying the relief you already have: no employer National Insurance for staff under 21, or apprentices under 25, on earnings up to £50,270.

Business rates: a second chance for restaurants?

The detail

Pubs and live music venues were given 15% off their business rates this year, and in July the government confirmed a 20% cut for pubs, social clubs and live music venues from April 2027. Restaurants, cafés and hotels were left out of both, but Healey has called the pub package a "downpayment" and promised wider reform at the Budget. Reports suggest he is looking at raising the Small Business Rates Relief threshold from £12,000 to £17,096, and UKHospitality is pushing for food-led venues and hotels to receive support in line with pubs.

The effects

A higher threshold would take some of the smallest sites out of business rates altogether, but its reach is uneven: in Westminster, under 4% of retail, hospitality and leisure premises would benefit. For mid-sized city restaurants, the measure that would really make a difference is pub-style relief, and that is far from certain.

How to prepare

• Look up your rateable value on the government's valuation service, and note whether it sits between £12,000 and £17,096.
• If you think your valuation is wrong, challenge it now rather than waiting, and don't build any relief into your forecast until it appears in the Budget documents.

Employer National Insurance

The detail

Since April 2025, employers have paid 15% on earnings above £5,000 a year, down from a threshold of £9,100. UKHospitality says the sector has lost around 100,000 jobs in two years and is asking for the threshold to rise to £10,000 by 2029, and with youth unemployment high on the government's agenda, the politics are more favourable than they were a year ago.

The effects

Every £1,000 the threshold rises saves an employer £150 a year per member of staff earning above it, whether they work 15 hours or 45, which makes it worth far more to businesses with large part-time teams than to most other sectors.

How to prepare

• Work out what a rise to £6,000 or £10,000 would mean for your payroll, so you know on the day whether your hiring maths has changed.
• If a marginal part-time hire can wait until after 28 October, let it.

Your customers

Spending power: better, but brittle

GfK's consumer confidence index rose to minus 13 in September, its highest reading since August 2024, but in the same survey people's inclination to save jumped while their appetite for big purchases fell, and GfK warned that rising inflation and energy prices could soon knock sentiment back. With income tax thresholds frozen until 2031 and a possible interest rate rise on 5 November, the Budget is unlikely to put much more money in people's pockets. Separately, the government has confirmed that mayors in England will be able to charge an overnight visitor levy, which UKHospitality estimates could add £100 to £120 to the average family holiday.

Mortgages are where that squeeze is most visible, because the conflict in the Middle East and a sell-off in government bonds have pushed lenders' costs sharply upwards over the past month. According to Moneyfacts, the average two-year fixed rate has climbed from 5.73% in mid-September to 5.96%, and five-year fixes crossed 6% earlier this month for the first time in three years. For anyone coming off a cheap deal agreed in 2021, the change is stark: Moneyfacts calculates that a £250,000 mortgage fixed at 2.38% that year cost around £1,106 a month, while the same loan on today's average two-year fix costs around £1,600, which is close to £500 a month that would otherwise have gone on dinners, drinks and weekends away, and a rise in interest rates on 5 November could push that figure higher still.

The effects

The customer you are likely to see over the coming months is a little more confident than last year but still watching every pound, and more likely to choose a lunch, a midweek supper or a drink at the bar than a long, expensive dinner. People don't need to feel rich to go out, they just need to feel less worried, but it does mean that value, and the feeling of value, will do a lot of the work.

How to prepare

• Give cautious customers easy ways in, such as set lunches, early evening menus or a bar offer that lets people come more often for less.
• Protect your Christmas trade by taking deposits on larger bookings and keeping an eye on last-minute cancellations.
• If prices must rise, small and regular increases land more gently than a single large jump, and generosity in the room does a great deal to convince people that what they are paying is worth it.

THE FINAL WORD

Hussein's clients feel they are on their own, and no single Budget is going to lift the pressures independent hospitality has carried for the past two years. But being prepared is not the same as being resigned, and the operators who know their numbers, their contracts and their customers before 28 October will be best placed to make the most of whatever help does arrive, and to absorb whatever doesn't.

Two weeks after the Budget, on Tuesday 10 November, we'll be at Coin Laundry with Viewpoint for Reading the Small Print: What the Budget Means for Hospitality, to work through what was actually announced and what to do next. Our last financially focused panel sold out in just a few hours, so watch this space for ticket release.

And as ever, please get in touch with your questions, worries and experiences, because the more we hear from you, the better we can advocate for the realities of running and working in hospitality today.