The UK Budget introduces both wage increases and new tax adjustments.
- The National Living Wage will rise by 6.7% for over-21s and 16.3% for 18-20 year olds.
- Farm inheritance tax relief is reduced from 100% to 50% for properties over £1 million.
- Soft Drinks Industry Levy sees an increase to further limit sugar content in beverages.
- Tobacco and vaping duties increase, with a new Vaping Products Duty from 2026.
In a significant move, the UK Budget outlines a 6.7% increase in the National Living Wage, raising it to £12.21 per hour for workers over 21. Additionally, 18 to 20 year olds will benefit from a 16.3% wage increase to £10.00 per hour. This adjustment is expected to impact the grocery retail sector significantly.
The Chancellor announced a shift in farm inheritance tax relief, reducing the 100% relief to 50% for agricultural properties valued above £1 million. This change is set to be implemented from April 2026, potentially influencing estate planning for farm owners.
Public health measures continue as the Soft Drinks Industry Levy rises, aimed at maintaining pressure on manufacturers to lower sugar levels in their products. Although specific rates were not mentioned, the levy traditionally applies 18p per litre for drinks with over 5.7.9 grams of sugar, and 24p for those above 8 grams.
The Budget further solidifies its health focus by renewing the Tobacco Duty escalator at RPI +2%, alongside a 10% duty increase on hand-rolling tobacco. From October 2026, a new Vaping Products Duty will impose a £2.20 charge per 10ml of vaping liquid, encouraging a shift from traditional tobacco use.
The alcohol sector faces challenges as duty rates return, subject to rises in line with the retail price index. Industry feedback expresses disappointment, with Miles Beale, chief executive of the Wine and Spirit Trade Association, remarking that this approach is both ‘counterproductive’ and a ‘real kick in the teeth’ for the sector.
The UK Budget makes substantial changes across wages and duties, reflecting a balanced approach to economic and public health goals.
