Bakery trade bodies have expressed concerns in response to the Autumn Budget.
In particular, concerns were raised about the impact of the increase in National Living Wage (NLW) and the National Minimum Wage (NMW), which were raised last April. From 1 April 2026. The NLW will go up 4.1%, the NMW by 8.5% for 18‑20 year olds, and by 6% for 16‑17 year olds or apprentices.
It wasn’t all bad though, with praise given for the introduction of permanently lower tax rates for retail, hospitality and leisure (RHL) properties set to benefit over 750,000 properties including high street bakeries.
In 2026/27, the business rates multiplier for small RHL properties will be 38.2p, making them almost 5p below the standard RHL multiplier of 43p. However, businesses outside of England have been excluded from this reform.
To balance the tax cuts for smaller firms, the government is increasing the rate on properties valued at £500k and above – it is, however, providing a £4.3bn support package over the next three years for those seeing bill increases.
Other measures affecting bakery businesses include making customs duties applicable to all imported good (including those valued at £135 or less); increasing taxation of savings and dividend income by two percentage points; and freezing personal tax and National Insurance Contribution (NIC) thresholds for a further three years till 2031. The government has also capped NICs relief on salary sacrifice into pension schemes to the first £2k of contributions per person from 2029.
Another welcomed move for sustainability was the plan to introduce mandatory certification for mechanically recycled plastic packaging, allowing businesses to claim an exemption from Plastic Packaging Tax.
Here’s are the reactions from the trade bodies representing bakeries and hospitality businesses:
Karen Dear, chief executive, Craft Bakers Association
“Today’s business rate cuts are welcome, but the wider Budget still leaves bakeries burdened by escalating labour and tax costs. Small bakeries are the backbone of the UK’s food landscape, yet Government policy is squeezing them from every direction.
Rising wage costs, frozen tax thresholds, higher dividend taxes and increased compliance pressures are combining to create an impossible trading environment. The £4.3bn support package is positive, but it does not offset the wider financial strain felt across the sector.
Without employer relief on the National Minimum Wage and National Insurance, many bakeries will be forced into reducing hours, cutting jobs or closing sites.”
The CBA also provided data from its recent sector-wide survey, which showed:
- Wage bills up £10,000–£50,000 in the last year
- 100% of bakeries have raised prices just to survive
- Over a third have stopped replacing staff
- 28% are considering cutting hours or making redundancies
- Nearly half say they may have to close sites in the next 12 months
Accordingly, the trade body called for targeted sector support including:
- Employer relief against rising wage costs, such as reinstating Small Employer NI Relief
- A Small Business Impact Assessment applied to all wage and tax policies
- Targeted support for energy-intensive food production.
Andrew Pyne, chief executive, Federation of Bakers
“The Autumn Budget brings a mix of opportunities and challenges for the UK’s baking industry. As one of the largest sectors within food and drink manufacturing, the baking industry depends on sustained investment in large-scale bakeries, which produce most of the UK’s bread.
Baking is an energy-intensive industry, and many bakeries continue to face significant utility costs. Further support would have been welcome alongside clarity on how the sector can access Government support to improve energy efficiency, particularly as large bakeries continue their transition towards net zero.
With an economy predicted for lower growth in future years and continued regulatory uncertainty, there is little in the budget that instils confidence in manufacturing businesses as their operating costs continue to increase. This government has missed an opportunity to support our members, who are critical in UK food manufacturing, with investment and growth.”
Lesley Cameron, chief executive, Scottish Bakers
“For Scotland’s bakery sector, there is little cheer in the Chancellor’s budget. There is no meaningful recognition of the pressures bakery businesses are facing, or even recognition they exist.
While the increase in the National Minimum and Living Wage, in particular for under 21s, will not directly affect some bakeries already paying above these thresholds, it will however create wider wage inflation that is challenging to absorb. With food price inflation returning to 5%, keeping consumer prices stable, while business costs continue to rise, is becoming unsustainable.
The extension of rates relief in England further highlights the competitive disadvantage for Scottish bakery businesses, who are not receiving equivalent support from the Scottish Government.
The expansion of the sugar tax may have limited direct impact due to the narrow product range affected, but it reinforces concern that government policy continues to rely on taxation as a route to improved public health, despite limited evidence that this approach delivers results.”
Karen Betts, chief executive, The Food and Drink Federation
“We recognise the Chancellor had difficult decisions to make given the challenging fiscal situation. But we would have liked to see more in this Budget on growth. Investment in productivity and growth in our sector is the best medium-term protection against the UK’s persistently high rates of food inflation, and it preserves jobs and boosts skills. While it’s positive to see the government engaging on inflation, there’s much more government and industry can do together now to address this.
This includes ensuring the UK’s largest manufacturing sector receives an adequate share of government R&D funding, maintaining stable regulation, and not overlooking food and drink in support for energy intensive industries. Where regulation needs to change, government must ensure meaningful consultation with business – as there was on the Soft Drinks Industry Levy, but which we need to see on the Nutrient Profile Model too. The right engagement between our industry and government will create the conditions for sustained growth, investment, and productivity gains.
Food and drink manufacturing employs half a million people in communities across the UK and, as responsible employers, we want to ensure our colleagues are rewarded properly. However, we’re concerned that the changes to salary sacrifice for pension contributions will discourage people from adequately saving for their retirement, creating further costs for the State down the line.
It’s good news the government has committed to legislating for mass balance accounting in this Finance Bill. This means that companies using mechanically or chemically recycled plastic will no longer have to pay as much in the plastic packaging tax. It’s also welcome that government will formally consult on the future of the costly, volatile and outdated Packaging Waste Recovery Notes (PRNs) system, and on ensuring councils run efficient, cost-controlled recycling services. To drive real change and value, it’s good to see government again acknowledging the key role of producers in leading the EPR scheme, through a Producer Responsibility Organisation.”
Kate Nicholls, chair, UKHospitality
“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.”
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