What Could the 2025 Autumn Budget Mean For The Hospitality Sector?

The upcoming 2025 Autumn Budget, scheduled for 26 November, is set to be one of the most closely watched fiscal events of the year. Across all industries, business leaders are waiting to see what the Chancellor has in store, but few sectors are feeling the tension quite like hospitality.

After a challenging year marked by rising costs, staffing shortages, and regulatory uncertainty, operators across restaurants, cafés, and hotels are wondering: will this Budget offer the support they need, or more of the same pressures?

As Lynne Blakey, sector specialist, puts it:

“It’s likely to be more of what we’ve already got.”

A Triple Whammy for Hospitality

The 2024 Budget delivered what many described as a “triple hit” to the hospitality sector.

The headline was the rise in National Insurance (NI) contributions, but that was only part of the story. For the first time, many young and part-time workers, who make up a large share of the hospitality workforce, were brought into the NI regime. Combined with above-average increases in the National Minimum Wage (including a 16% rise for under-21s), businesses were left facing steep increases in labour costs.

The result has been stark. According to UKHospitality, the industry accounted for 53% of all redundancies across the UK since the 2024 Budget, with a 4.1% drop in employment already recorded. The organisation warns that up to 100,000 jobs could be lost by the time the Chancellor delivers his statement in November.

Zero-Hour Contracts and the Employment Bill

Beyond taxation, hospitality businesses are also preparing for the impact of the Employment Rights Bill, which aims to regulate zero-hour contracts.

While the bill is designed to protect workers, industry experts warn that excessive restrictions could limit flexibility, something many hospitality workers value for balancing childcare, studies, or other commitments.

The creation of a Fair Work Agency (FWA), a new body under the Department for Business and Trade (DBT), will also reshape the compliance landscape. The FWA will act as a single point of contact for employment-related complaints and enforcement, making it easier for employees to raise issues and for businesses to be held accountable.

“It’s going to be much easier for employees to make complaints,” notes Blakey. “That’s not a bad thing — knowing your rights is crucial. But it means compliance will be more important than ever.”

VAT: The Elephant in the Room

Few issues generate as much debate as VAT. The hospitality industry has long campaigned for a reduced rate, but experts say a cut is unlikely.

“Everybody in the sector would like to see something on VAT,” Blakey explains. “But it’s inordinately expensive. The VAT reduction during COVID cost around £8 billion — it’s just not sustainable right now.”

Even when VAT was temporarily reduced, most operators used the relief to protect razor-thin margins rather than lower prices. While a cut would provide much-needed breathing space, it’s unlikely the Treasury will see it as a fiscally viable move.

Business Rates: Winners and Losers

There is, however, a glimmer of hope on business rates. Reforms are expected in April 2026, potentially benefiting smaller premises with rateable values under £500,000.

But not all hospitality businesses will benefit equally. High-value properties, such as city-centre restaurants or large venues, may find themselves facing higher costs despite lower profit margins.

Blakey advises operators to prepare early:

“Do your planning now. Run sensitivity analysis on your cash flows, make sure you’re not overpaying, and understand how potential changes could impact your business.”

Looking Ahead: Planning for Resilience

The Autumn Budget 2025 will set the tone for the hospitality sector heading into 2026. Whether or not significant relief measures are announced, the industry’s ability to adapt,  by managing costs, improving efficiency, and planning strategically, will be critical to survival and growth.

At AGS Group, we understand the challenges hospitality businesses face. From KFC and Domino’s to Costa Coffee, we work with leading chains across the UK, helping them stay compliant, efficient, and ready for what’s next through expert facilities management (FM) solutions.

Stay Prepared with AGS Group

The hospitality landscape may be changing, but with the right operational support, your business can continue to thrive, no matter what the Chancellor announces this November.

Find out how we can help your restaurant or café stay compliant, cost-efficient, and ready for the busy Christmas season and beyond.

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