The UK Chancellor’s Autumn Budget has drawn a cool reception from hospitality leaders and advisers to family businesses, who say targeted changes fail to offset mounting tax and cost pressures. Kate Nicholls, Chair of UKHospitality, said: “Bricks and mortar hospitality businesses are being taxed out, and they have been penalised by the broken business rates system for far too long.
Today the Chancellor recognised the importance of hospitality and provided a permanently lower multiplier for hospitality businesses – reforms secured by UKHospitality. However, the 5p discount is only a quarter of the maximum 20p discount the Government proposed last year. This is particularly frustrating given changes to business rates valuations will mean that many hospitality businesses’ tax bills will still significantly rise, alongside increases to the minimum wage adding extra cost.
Business tax rates for hospitality must continue to fall for the rest of this parliament. The Government has heeded our calls for significant transitional relief for businesses, which will mitigate the worst impacts of the revaluation. Hospitality remains under significant cost pressures, with the highest tax burden in the economy. We will continue to campaign for additional support for the sector, including further business rates discounts.” The Scottish Beer & Pub Association (SBPA) struck an equally downbeat note, warning that the Budget “does very little to help” and that changes to business rates in England put pressure on the Scottish Government to respond.
Commenting, SBPA President Andrew Lawrence said: “This budget does very little to help Scotland’s pubs or brewers. The increase in beer duty will hit consumers directly, while the rise in the NMW will mean an extra bill of £25m for pubs. The sector is already struggling under the strain of high taxes, cost increases, and the cost-of-living crisis impacting on consumer spending habits.
“The changes to business rates in England also mean that without some form of relief in the Scottish Government’s January budget, Scots pubs will continue to face a heavier rates burden that their English counterparts. This disparity will drive closures and stifle investment in communities across Scotland. We’re calling on the Scottish Government to use its Budget to set out a permanent fix for this imbalance and to deliver immediate rates relief before more pubs are forced to shut their doors.”
The whisky industry has also condemned the decision to raise alcohol duty in line with inflation, arguing it piles pressure on a strategically important Scottish export and domestic hospitality venues. Paul Kopec, CEO of leading whisky investment firm Speyside Capital, says: “Today’s decision to increase the duty on alcohol once again is undoubtedly a serious mistake that will place further pressure on the UK’s whisky sector and the wider hospitality economy. While Scotch whisky is a major global export, duty and VAT apply only to domestic sales, around 10% of total volume.
“This rise therefore falls disproportionately on UK consumers, retailers, bars and restaurants at a time when many are already struggling. Scotch is already one of the most heavily taxed spirits in Europe. Increasing duty yet again risks reducing consumption, squeezing already razor-thin margins, and ultimately accelerating domestic job losses across the entire supply chain, from bottling and distribution to hospitality, retail and tourism.
“From an investor’s perspective, Scotch whisky remains a globally diversified asset class with demand in more than 180 markets and a finite supply of maturing stock that naturally appreciates over time. But UK tax policy still matters. Confidence in the domestic market, where brands build visibility, trial, loyalty and premiumisation, has a direct impact on long-term investment.
“When the government chooses to treat Scotch as a convenient means of revenue, global capital may increasingly look to markets where government policy actively supports growth in premium spirits. The Budget was a missed opportunity to provide stability with a duty freeze and a clear framework. Instead, the government has opted for a short-term measure that risks undermining one of Britain’s most valuable and culturally significant industries.”
Professional advisers also highlighted significant implications for succession and investment. Ade Babatunde, Senior Financial Planning Director at Rathbones, says: “The Chancellor has thrown a lifeline to family businesses and farmers. The £1m allowance for 100% Business Relief (or Agricultural Property Relief) can now be passed to a surviving spouse or civil partner – even if the first death happened before the rule change. That means families won’t lose relief if it wasn’t used straight away.
“This could be a game-changer for SMEs ahead of next April’s shake-up, sparing many from selling assets just to pay tax. However, estate state planning is still getting trickier. Beyond fiscal drag, new IHT changes are coming: reduced Business and Agricultural Property Reliefs, pensions included from 2027, and frozen thresholds. The Treasury still wants a bigger slice of the “great wealth transfer.”
Turning to growth finance, Babatunde notes that: “Eligibility for Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) will expand beyond start-ups, giving SMEs at different growth stages better access to patient capital. Annual and lifetime investment limits rise – but upfront income tax relief for VCTs drops from 30% to 20%. The goal? Keep investors interested while channelling long-term support to high-growth businesses.”
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On owner remuneration, he adds: “Dividend tax rates are up two percentage points, sparking debate on whether dividends remain tax-efficient. For most lower-rate taxpayers, they still beat salaries once National Insurance is factored in. Business owners should review remuneration strategies – but avoid knee-jerk moves. Dividends remain a cornerstone of efficient profit extraction.”
Succession via Employee Ownership Trusts is also affected: “Capital Gains Tax relief on disposals to Employee Ownership Trusts falls from 100% to 50%. EOTs remain a viable succession planning tool, but the reduced incentive could hit larger deals. If you’re considering this route, reassess timing and financial implications.”
