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Labour has announced its first budget in almost 15 years – and the first ever delivered by a female chancellor.

Here we look at some of the key announcements made by Rachel Reeves that will impact owners and operators of bakery businesses of all sizes.

 

National Living Wage

Ahead of the budget, the chancellor confirmed:

  • National Living Wage will increase from £11.44 to £12.21 an hour from April 2025. This is an increase of 6.7%, or £1,400 a year.
  • The National Minimum Wage for 18-to-20-year-olds will rise 16.3%, from £8.60 to £10 an hour, or £2,500 a year.
  • The apprentice wage will increase from £6.40 to £7.55.

The increase to the living wage marks the first step towards aligning the National Minimum Wage and National Living Wage to create a single adult wage rate, which the Treasury said “would take place over time”.

 

Fuel duty

The chancellor has frozen the rate of fuel duty and will maintain the existing 5p cut. 

 

Employee taxation

No increases to rates of income tax, national insurance or VAT.

From 2028-29 personal tax thresholds will rise in line with inflation.

 

Employer National Insurance

Employer’s national insurance has risen 1.2 percentage points to 15% from next year.

Meanwhile, the threshold at which it must be paid is falling from £9,100 per year to £5,000.

Employment Allowance , which allows employers to reduce their annual National Insurance liability has been raised from £5,000 to £10,500. This has been welcomed by the Federation of Small Businesses:

 

Business rates

From 2026/27 permanently lower rates will be introduced for retail, hospitality & leisure properties.

For 2025/26, 250,000 retail, hospitality & leisure properties will receive 40% relief on their bills, up to a cash cap of £110,000 per business. The current rate of relief is 75%.

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