In a significant economic update, Chancellor Rachel Reeves presented the UK Budget, highlighting a series of fiscal changes that include a notable increase in the National Living Wage alongside adjustments in various tax sectors.
The Chancellor unveiled that the National Living Wage will be raised by 6.7%, bringing it to £12.21 per hour for individuals over 21 years of age. For those aged between 18 to 20 years, wages will increase by 16.3% to £10.00 per hour. This policy aims to bolster income for UK workers and is anticipated to have a substantial impact on the grocery retail sector.
Simultaneously, the Budget introduces significant shifts in tax policies, set to affect several sectors. Of particular note is the replacement of the 100% inheritance tax relief for farms and agricultural properties valued over £1 million with a 50% relief, effective from April 2026. This measure is designed to address economic imbalances but has sparked concern among the farming community.
Public health measures are also a focal point, with adjustments to the Soft Drinks Industry Levy. While specific new rates were not detailed, the levy, first introduced in 2018, aims to encourage manufacturers to reduce sugar content in beverages.
Furthermore, the Budget maintains the Tobacco Duty escalator at the retail price index plus 2% for the remainder of the current Parliament, coupled with a 10% duty increase on hand-rolling tobacco. Additionally, a new Vaping Products Duty will be introduced in October 2026, set at £2.20 per 10ml vaping liquid. These changes reflect the government’s ongoing commitment to public health.
The alcohol industry faces challenges as well, with a decision to increase alcohol duty in line with the retail price index. This has been met with criticism from the Wine and Spirit Trade Association. Its chief executive, Miles Beale, expressed concern, stating that the increase is a “real kick in the teeth” for the industry, considering previous calls to prevent such rises after the pandemic-related freeze.
The UK’s latest Budget, spearheaded by Chancellor Rachel Reeves, demonstrates a strategic balance between enhancing worker wages and modifying tax regimes across various sectors. While aimed at economic and public health improvements, these changes have prompted diverse reactions from affected industries.
