Budget 2025 and UK Hospitality: How Operators Can Stay Ahead

Budget 2025 confirms what many pubs, restaurants, hotels, cafés and venues are already feeling: costs are rising and margins are tight. But that doesn’t mean the story is all negative.

Operators who get really strong on numbers, efficiency and compliance can still grow, attract investment and bring in customers. This article breaks down what the Budget means in plain English and turns it into a practical, positive action plan.

1. The short version: what Budget 2025 changes for hospitality

Here are the main points operators need to know:

• The National Living Wage increases to £12.71 per hour from April 2026 for workers aged 21 and over. Rates for younger workers and apprentices also rise.
• Business rates are being reformed from April 2026. Retail, hospitality and leisure businesses in England get a lower tax rate per pound of property value, and there is a support package to smooth big jumps. But many pubs, restaurants and hotels will still see higher bills because property values are being updated.
• Alcohol duty increases in line with inflation from February 2026, adding tax to every drink sold.
• Local mayors in England can introduce a “tourist tax” on overnight stays in hotels, B&Bs and short-stay accommodation.
• VAT for hospitality stays at 20%, and income tax and national insurance thresholds are frozen, which continues to squeeze household budgets.
• A new National Licensing Policy Framework is designed to encourage growth and more vibrant high streets, while keeping a strong focus on safety and responsibility.

In short: you can’t rely on lower taxes or a big consumer boom. But there is room to protect and even improve profit if you run your business with more data, discipline and less friction.

2. Business rates: understand the new rules and plan with confidence

The government is promoting “permanently lower business rates” for retail, hospitality and leisure. The key change is a slightly lower tax rate on each pound of your property’s rateable value from April2026, alongside some support to soften sudden increases. However:

• Property values for  many hospitality sites - especially pubs, restaurants and hotels - are expected to rise in the 2026 revaluation.
• As a result, some operators will still pay more overall, even with the lower tax rate and support schemes.

How to turn this into something useful:

Rather than worrying about headlines, treat this as a chance to really understand what each site will contribute in the future:

1. Build a simple model for each site
   
   • Use the new rateable value (when available) and the new tax rate to estimate likely bills from 2026 onwards.
   • Include rent, labour, energy and food and drink margins so you see the full picture.
2. Spot where to invest, not just where to cut
   
   • A site with higher property costs can still be a strong performer if it has the right concept, pricing, and operations.
   • Use your model to decide where to focus investment, marketing and training, not just where to trim spend.
3. Keep good records to support any challenge
   
   • If you need to question a valuation or apply for relief, you will want strong evidence about how the site is actually used and how it trades.
   • Clean records of opening times, usage, closures, refurbishments and maintenance all help her

💡 How a system like Aquaint helps:
When all your checks, documents and site notes live in one place, you can quickly compare locations, export evidence and make decisions with confidence –instead of chasing paper files or old emails.

3. Higher wages: turn a cost increase into better productivity

From April 2026, the higher National Living Wage and increases for younger workers and apprentices will raise payroll costs across the board.

That can feel daunting, but it also creates a clear incentive to get more value from every paid hour without burning people out.

Practical ways to respond:

1. Match staffing levels to real demand
   
   • Use historical sales by day and time to design smarter schedules.
   • Avoid the old habits of “this is how we’ve always staffed a Monday” and instead match people to realistic trade patterns.
2. Remove low-value admin from shifts
       Ask a simple question: “What are we paying team members to do that doesn’t need to be done on paper?”
       Typical time-sinks include:
   • Paper food safety checklists
   • Manual cleaning and opening/closing logs
   • Hunting for training records or certificates

Moving these tasks into a mobile-friendly digital system can turn twenty minutes of paperwork into a quick, structured checklist with automatic reminders.

3. Standardise best practice so new starters ramp up faster
   
   • Clear digital workflows for opening, closing, cleaning, line checks allergens etc help new team members become productive sooner.
   • That reduces pressure on experienced staff and keeps standards consistent, even with high turnover.

💡 The quiet benefit of digitising checks:
When everyday tasks are logged in an app rather than on clipboards, you can see which shifts are smooth, where tasks are slipping, and where small changes could unlock more time for guests and sales.

4. Taxes on drinks, sugary products and overnight stays

Alcohol duty:

An inflation-linked increase in alcohol duty from February 2026 means every pint, glass of wine or cocktail will carry a little more tax. Instead of simply raising prices across the board, think about:

• Menu design: Highlight higher-margin products, consider different serve sizes, and introduce premium options where appropriate.
• Waste control: Digital logging of line checks, cellar checks and wastage can protect your margins and reduce needless loss.

Extended sugar levy:

The extension of the sugar tax to some high-sugar milk-based drinks means:

• Suppliers may reformulate recipes or increase prices.
• You may need to review bundles, kids’ offers and soft drink ranges to keep both value and margin.

Tourist taxes:

New powers for mayors to introduce a visitor levy on over night stays will affect hotels, serviced apartments, B&Bs and other accommodation providers in certain areas. Even if the charge is modest and passed directly on to guests, you will still need to:

• Update booking and  billing processes
• Track and report the levy correctly
• Explain it clearly to guests, especially those not used to city taxes in the UK

💡 Where Aquaint can support:
You can store policies, procedures and internal checks for things like visitor levies centrally, with clear ownership and reminders. That makes it easier for every site to stay aligned, even when local rules differ.

5. No VAT cut and cautious consumers – but growth is still possible

Many in the sector had hoped for a reduced rate of VAT on hospitality. That did not happen; the standard rate remains in place.

At the same time:

• Frozen tax thresholds mean many customers feel they have slightly less money left at the end     of the month, even if wages are going up.
• Economic forecasts suggest steady but modest growth, not a boom.

Despite this, plenty of operators are still growing by focusing on value, experience and efficiency.

How to grow in a cautious market:

• Increase spend per guest, not just covers
  • Well-designed add-ons, upgrades and bundles can lift average spend without feeling pushy.
• Make value  extremely clear
  
  • Guests are happy to pay more when they see quality ingredients, great service and a memorable experience.
• Know which parts of  your week and which parts of your menu really drive profit
  
  • Even a simple export from your till system into a spreadsheet, reviewed regularly, can highlight your most profitable dayparts and dishes.

6. Licensing and compliance: less red tape on paper, higher expectations in practice

The new National Licensing Policy Framework encourages councils to think about economic growth and vibrant high streets when making licensing decisions. There is talk of:

• More flexible outdoor trading in some areas
• Support for bringing empty units back to life as hospitality spaces
• A more consistent approach across local authorities

For responsible operators, this can be a real opportunity – if you can demonstrate that your sites are well-run, safe and compliant.

Turning compliance into a strength:

1. Bring all licence information together
   
   • Store each site’s licence and key conditions in one central place, rather than scattered across folders and inboxes.
2. Translate conditions into daily and weekly tasks
   
   • If your licence requires doors to be closed after a certain time, create a simple check that staff complete and log each night.
   • If you need to keep noise checks or incident logs, build them into your routine, not as “extra” work.
3. Build a strong audit trail automatically
   
   • Time-stamped records of checks, incidents, maintenance and training give you something concrete to show environmental health officers, licensing officers, insurers and landlords.

💡 How Aquaint fits in:
Aquaint turns things like food safety checks, allergen controls, health and safety checks and licensing conditions into easy, repeatable digital tasks. That helps frontline teams do the right things consistently and gives head office clear visibility of how each site is performing.

7. A positive playbook for 2025–2026

Rather than focusing on what you can’t control, here’s a simple, positive plan you can act on now:

1. Know your numbers for each site

• Model future business rates, wage costs and duty changes.
• Look at profit and loss performance with these changes included so there are no surprises.

2. Free your teams from paperwork

• List out every recurring task that still lives on paper or in messy spreadsheets.
• Move what you can into a mobile-first system that prompts the right tasks at the right times and stores evidence automatically.

3. Protect quality while reducing waste

• Use your operational data to spot patterns:
  • times when checks are missed
  • recurring maintenance issues
  • peak times where you  are consistently over or under-staffed
• Fix problems with targeted training and small process changes, not just pressure on staff to “work harder”.

4. Treat compliance as a selling point

• Strong scores on food hygiene, safety and licensing build trust with guests, landlords, insurers and lenders.
• Being able to quickly show clear, organised records makes every inspection or review less stressful and more predictable.

8. Final thoughts

Budget 2025 does make life more expensive for UK hospitality. Wages rise, some taxes increase, and there is no big cut in VAT to stimulate demand. But operators are far from powerless.

Those who understand their costs, design smarter operations, and embrace simple digital tools can stay profitable, support their teams better and keep delivering great experiences for guests, even in ahigh-cost environment.

A platform like Aquaint will not rewrite the Budget. What it can do is remove paper, reduce risk, and give you and your teams more time and clearer data so you can make good decisions and stay positive about the future of your business.

Authors Note:

“This budget will make things tougher in an already tough environment for hospitality operators. We must continue to pressure the Government collectively to support the industry that is the third largest employer and the heartbeat of the UK economy. It must also be highlighted that despite all of this; I do not believe that far-right politics pushed by Nigel Farage and the Reform party are the answer. Hospitality, by definition, is inclusive and in service of everyone, a government that does not reflect these values is not on the side of hospitality."