Budget 2025: Key Takeaways For Growers, Retailers, and Hospitality

Changes to business rates, minimum pay, inheritance tax, and apprenticeship funding herald winners and losers across the industry with the impact set to trickle down to consumers in the coming months as inflationary pressure increases on the UK’s food system. 

FreshTalk Daily takes a look at the key changes and mixed industry reactions to Chancellor Rachel Reeves’ Autumn Budget on Wednesday 26 November.

Wages

The National Living Wage will increase by 4.1% to £12.71 an hour for the over 21s, up 50p on the current figure.

The National Minimum Wage will rise by 8.5% to £10.85 an hour for 18-20 year olds, up 85p. 

This will affect the horticulture, retail, and hospitality workforces in particular, and could stifle employment opportunities and trigger staff job cuts. 

The NFU said the increase in the National Living Wage, which will have risen 12% in two years, puts further cost pressures on agricultural and horticulture businesses and further inflationary pressures on our food system.

“At a time when the government has an ambition to get the country eating more fruit and vegetables, it will hit the horticulture sector hardest,” pointed out NFU President Tom Bradshaw.

Likewise, for the hospitality industry the wage increases will place additional pressure on businesses.

“We have a situation where hospitality businesses are checking their wage bills and rateable values, and their hearts are sinking at the eye-watering increases before them,” stated Kate Nicholls, Chair of UKHospitality.

With employment cost increases over the last year already having added £5bn to retail costs, the British Retail Consortium (BRC) said further increases will be challenging for retailers to absorb, given tight retail markets. 

“But the NLW uplift announced by the Chancellor was in line with the core expectations announced by the Low Pay Commission, providing stability for retailers’ financial planning,” conceded BRC Chief Executive, Helen Dickinson.

Business Rates

The Chancellor’s announcement of a permanent reduction in business rates tax provides welcome relief for some businesses but not all. 

From April 2026, business tax rates will be reduced permanently for 750,000 retail, hospitality, and leisure businesses, worth nearly £900m a year, and benefitting small businesses.

However, this reduction will be funded by a surtax charged to larger high-value properties with a rateable value worth £500,000 or more. 

Large retail portfolios on the high street as well as supermarkets and warehouses will be affected, ultimately putting pressure on prices passed down to consumers.

The surtax, however, will only be around one quarter of the level initially expected, leading to some relief for retailers.

Sainsbury’s chief executive, Simon Roberts, said “industry concerns have been heard”. “We welcome the government’s decisions in the budget on business rates, and that industry concerns have been heard," Roberts told The Guardian. "We have been working tirelessly to manage rising costs, and today’s measures mean we can continue tackling inflation and providing great value, quality and service for our customers."

The Budget provides the “clarity and certainty” that small shops and local communities have been waiting for, according to Co-op group CEO Shirine Khoury-Haq.

“The government’s decision on business rates is a welcome and important step that will help protect jobs, strengthen local economies and support high streets across the country,” explained Khoury-Haq. 

Although a step in the right direction, BRC described the changes to business rates as “retrograde step” that does little to mitigate the rising cost of food and essentials. 

“Larger stores, which already pay one third of the industry’s business rates bill and employ around a million people, should have been exempted from a surtax intended to fund support for the high street,” noted BRC’s Dickinson. “Retailers face a delicate balancing act as they strive to invest, hire, and keep prices affordable,” she pointed out.

UKHospitality, meanwhile, said the 5p business rates discount is “simply not enough” to offset wage rises, holiday taxes, and steep increases in rateable values, which will put further pressure on businesses and reduce job opportunities, particularly for young people. 

“Our tax burden remains the highest in the economy and we need urgent action to reduce the cost of doing business,” declared Nicholls of UKHospitality. “The only way to cut the cost of living is to reduce the cost of doing business, and this Budget does the opposite.”

Inheritance Tax

There was a small change to the inheritance tax for farm businesses set to come into effect on 6 April 2026.

The 100% agricultural property relief (APR) threshold will be transferable between spouses. 

Those farmers who are married, or have deceased spouses, will be allowed to transfer their £1 million inheritance tax allowance to one another if one of them dies having not used their allowance.

After many months of staunch lobbying Labour MPs, the NFU said the change falls well short of protecting many family farms and elderly and vulnerable farmers. 

“It doesn’t go anywhere near far enough in protecting the working people of the countryside,” lamented NFU’s Bradshaw.

Apprenticeships

Funding for the training of apprentices under 25 years of age will be free for SME businesses, removing the current 5% fee.

The saving, albeit modest, was welcomed by the NFU in helping businesses to better support the next generation of farmers and farm workers. 

“We believe farming may benefit from the announcements on apprenticeships and it could help bring the next generation into our food and farming sector," said NFU’s Bradshaw. 

Pension Salary Sacrifice

National Insurance will be applied on contributions to salary sacrifice schemes above a threshold of £2,000 a year from April 2029. 

BRC said changes to salary sacrifice will hurt retail employees and businesses alike. 

“For retailers, these changes will cost hundreds of millions, punishing those businesses with strong pension offerings, and/or forcing them to reduce the contributions they make to their employees’ retirement security,” Dickinson commented.

Fuel Duty 

The temporary 5p fuel duty cut will be extended for a further five months until the end of August 2026 to keep van and lorry journeys affordable. Heavy Goods Vehicles are set to save £843 next year.

However, when the freeze ends in September 2026, transport costs will increase considerably for logistics operators, ultimately funnelling down the supply chain.

Future Impacts

Describing the Budget as “tough” for shoppers, IGD said it expects food inflation to persist into 2027, with government policy contributing about a third of this pressure. 

“Food inflation will run ahead of overall inflation, making food relatively more expensive,” revealed IGD chief economist James Walton. “Therefore, food shoppers will remain extremely cautious and reluctant to spend and the operating environment for food businesses will remain extremely difficult.”

IGD expects the next few years will be characterised by weak volume growth and tight profits across retail and away from home, with no immediate relief on the horizon for consumers or businesses.

The increased taxation will slow volume growth which means less investment for the future resilience of the food system, IGD added, although there are opportunities for growth, especially in horticulture and poultry. 

View the Budget in full here.