Budget Highlights

The Chancellor says the Budget will increase taxes by £40 billion.

Economic forecasts

The Office of Budget Responsibility (“ORB”) forecasts that the UK economy will grow by 1.1 percent this year, 2 percent next year and 1.8 percent in 2026.

The OBR also forecasts that inflation will average 2.5 percent this year and 2.6 percent next year, before falling to 2.3 by 2026.

Minimum Wage (NMW)/National Living Wage (NLW)

The national living wage will increase by 6.7 per cent, from £11.44 an hour to £12.21 for those aged 21 and over. A gradual shift to a single adult rate will also come into play, increasing the minimum wage for under-21s by 16.3 per cent to £10 an hour.

Fuel tax

Fuel duty has been frozen again and the temporary 5p per liter reduction has been extended for another year.

National insurance

The overall National Insurance rate for employers has been increased from 13.8 per cent currently to 15 per cent from April next year.

The income thresholds at which employers start paying National Insurance contributions have also been lowered from £9,100 to £5,000.

Capital gains tax

Capital gains tax (CGT) will be increased from 20 to 24 per cent on sales of shares and other assets.

Inheritance taxes

The freeze on the £325,000 inheritance tax threshold has been extended until 2030. Inherited pensions will be subject to the inheritance tax regime for the first time from 2027. The Chancellor also introduced inheritance tax to 20% on agricultural land and businesses of higher value. more than a million pounds sterling.

Alcohol and tobacco

Draft duty will be reduced by 1.7 per cent, shaving a penny off the price of a pint at the pub. Duties on hand-rolled tobacco will be increased by 10 percent.

Vaping

A tax on vaping aimed at discouraging non-smokers and young people will be introduced at £2.20 per 10ml of liquid, as well as a one-off increase in tobacco duty to continue to encourage people to choose vaping. rechargeable vaping rather than smoking.

Non-dom tax regime

The non-domestic tax regime allowing foreign nationals living in the UK to avoid paying tax on their foreign income has been abolished.

Stamp duty

Additional stamp duty on second homes has been increased by 2 percentage points to 5 per cent from tomorrow.

Private schools

The VAT exemption on private school tuition fees will be removed from January and professional rates on tuition fees will be introduced from April.

Income tax threshold

The freeze on income tax thresholds will not be extended and will be increased in line with inflation for the 2028-29 tax year.

Stamp duty

Stamp duty will be increased by 3 to 5 percent for second home owners.

Obligation of air passengers

An airline tax of £2 per passenger on a short-haul economy flight, with those traveling by private jet facing a 50% increase, equating to a bill of around £450 per passenger on a private jet.

Windfall profits tax

The windfall tax on oil and gas profits will be increased to 38 percent.

Education

£2.3 billion increase in budgets for main schools from next year and £300 million for higher education.

NHS

A £22.6 billion increase in the daily health service budget has been promised, alongside a £3.1 billion increase in the capital budget for this year and next, with the aim reduce waiting times for appointments. only 18 weeks.

Defense

Ministry of Defense budget increase by £2.9 billion next year.

The Post Office and the blood scandals

The Chancellor has set aside £11.8 billion to compensate those infected and affected by the infected blood scandal and £1.8 billion to compensate victims of the Post Office Horizon scandal.

National Wealth Fund

£1bn investment will be made available for the airspace sector, £2bn for the automotive industry and £520m for a new science manufacturing fund the life.

Accommodation

The right to buy at a reduced price will be reduced and local authorities will be able to make more money from sales.

Warm houses

Around £3.4 billion will be provided over the next three years to insulate 340,000 homes.

Borrowing rules

Government borrowing rules will be changed to facilitate up to £50bn of new infrastructure spending.

Focus on retail and leisure

The impact of wage increases will undoubtedly be felt most strongly in sectors such as retail and hospitality, where NMWs are highly paid. Many employers in these sectors can struggle to maintain pay gaps, with managers earning only slightly more than the staff they supervise, leading to recruitment and retention issues.

Employers who pride themselves on paying for NMW/NLW may no longer be able to afford to do so. Some suggest that removing the NMW/NLW age brackets could discourage companies from employing younger workers, who might be seen as lacking experience and would no longer represent a cost saving.

The increase in employers’ national insurance may worry some businesses. Lowering the Employment Allowance threshold to £5,000 means employers will be required to pay NI for employees earning as little as around £100 a week. This will encompass many casual and short-hours workers, particularly prevalent in the retail and leisure sectors.

The drop in the price of a pint should be welcomed in the R&L sectors.

Fortunately, the Government intends, from 2026-27, to introduce two lower permanent tax rates for retail, hospitality and leisure properties, with the intention that these rates will be funded by a higher multiplier for the most valuable properties.

The Chancellor announced she would provide a 40% reduction on business rates for the retail, hospitality and leisure sector in 2025-26, up to a cap of £110,000 per business. At the same time, the tax multiplier for small businesses will be frozen next year.

In order to support local high streets and combat the sharp rise in evidence of shoplifting in recent years, the Chancellor made clear that she would remove effective immunity for low value shoplifting and provide additional funding to combat organized gangs that target retailers, and would provide more training. to police officers and retailers to help end shoplifting.

Weightmans LLP has a dedicated retail and leisure team of specialists to meet your business needs and offer comprehensive advice.