Autumn Budget 2025 – What it Means For Restaurants, Cafés, and Takeaways

The chancellor has delivered the Autumn Budget, setting out a mix of tax rises, cost pressures, and a few areas of support. For hospitality owners already facing tight margins, higher wage bills and supply chain costs, this year's Budget brings several changes worth planning for now.


Below is a straightforward breakdown of the measures most likely to affect restaurant, café, and takeaway businesses, and what they mean in practice.


Rising wage costs


The legal minimum wage for over-21s will rise to £12.71 per hour from April 2026. Rates for 18 to 20-year-olds will increase to £10.85.

For hospitality, where labour makes up 30 to 40 per cent of costs, this is one of the biggest financial pressures to prepare for. Front-of-house, barista and kitchen roles often sit close to minimum wage levels, so owners should:


  • Review rotas and identify any inefficiencies
  • Update cash flow forecasts for the higher payroll cost
  • Revisit menu pricing to maintain your margin without surprising customers


This rises alongside the continued freeze on employer National Insurance thresholds until 2031, meaning NI contributions will steadily increase as wages rise.


New sugar tax extension – including milkshakes and lattes


From 2028, the tax on sugary drinks will be extended to pre-packaged milkshakes and lattes. This is a significant change for cafés and takeaway coffee shops selling bottled or canned sweet drinks.


If you stock branded ready-to-drink beverages, suppliers are likely to pass on the cost. Consider:


  • Reviewing high-sugar drinks ranges
  • Offering lower-sugar alternatives
  • Modelling price changes well ahead of 2028


Freshly prepared in-house drinks do not appear to be affected, but further detail is expected.


Fuel duty freeze extended


Fuel duty will remain frozen until September 2026. For businesses running delivery vehicles or picking up supplies from wholesalers, this offers a small saving and more price stability.


However, the forthcoming mileage-based tax for electric and hybrid vehicles from April 2028 is one to keep on your long-term radar, especially if you operate a growing delivery service.


Higher taxes on rental income


The tax charged on rental income will rise by 2 percentage points from April 2027. This affects hospitality owners who:


  • Sublet part of their premises
  • Earn rental income from flats above restaurants or shops
  • Operate mixed-use buildings


It does not directly affect business rates, but it increases tax on any personal property income streams tied to your business.


Corporation tax and employer NI impacts


The freeze on employer NI thresholds means costs will quietly rise each year as wages increase. There is also a corporation tax change contributing £1.5bn in extra tax by 2030, though details depend on your structure. It is worth reviewing profit extraction plans with your accountant to avoid nasty surprises.


Salary sacrifice cap


From 2029, salary sacrifice for pensions will be capped at £2,000 a year. This mainly affects larger hospitality groups, but small operators should also review staff benefits if they currently use salary sacrifice to cut NI costs.


Overseas small-package exemption scrapped


From 2029, the tax exemption on goods imported under £135 will end. Food businesses sourcing small equipment or packaging from overseas marketplaces (Amazon, AliExpress, eBay Global) may see higher costs.


Household income changes – indirect effects on hospitality


Several Budget measures will shape customer spending power over the next few years:


  • Income tax thresholds frozen for three more years
  • State pension rising 4.8%
  • Minimum wage rising
  • Universal Credit changes


For restaurants and cafés, this creates a mixed picture. Customers on lower incomes may feel squeezed by frozen tax thresholds and rising living costs. At the same time, minimum wage increases mean some younger customers will have slightly higher disposable income.

Planning ahead for pricing, offers, and customer loyalty schemes will help stabilise footfall.


Alcohol duty set to rise


From 1 February 2026, alcohol duty will increase in line with RPI inflation. This includes draught drinks, which directly affects pubs and licensed restaurants.


Expect:


  • Higher wholesale prices
  • Pressure on margins for popular items like beer and cider
  • The need to review bar pricing strategies


Transport and travel


Rail fares in England will be frozen next year. This may help staff commuting costs slightly but is unlikely to materially change business expenses.


Training and recruitment support


A positive change: apprenticeship training for under-25s will be free for SMEs. For hospitality owners struggling to recruit and upskill staff, this could be a helpful route to build talent without large training costs.


What this Budget means overall for hospitality


Hospitality businesses already manage tight profit margins, and this Budget largely confirms more cost pressure ahead. The biggest impacts for restaurants, cafés and takeaways will come from:


  • Higher wage bills
  • Steadily rising employer NI costs
  • Increased alcohol duty
  • New sugary drink tax extensions
  • Long-term tax rises through frozen thresholds


There are small pockets of support through fuel duty and apprenticeship training, but the overall environment remains one where careful cost control and proactive planning will be essential.


How we can help


We work with restaurants, cafés and takeaways across the UK, helping owners keep control of their costs, manage payroll rises, and plan for tax changes well before they hit your bottom line. If you would like a personalised review of how the Autumn Budget affects your business, please get in touch.


Restaurants, cafes, and takeaways can benefit greatly from working with a specialist accountant. If you hadn’t noticed already, we are specialist accountants in Leeds for food service businesses, so unlike most accountants, we have years of experience working with businesses just like you. If you're interested in finding out more about how we can help your restaurant become more profitable, book a call with one of our accounting experts.