Hospitality, leisure and retail businesses will receive 40% relief on business rates in today's budget, but for many hospitality businesses, it is too little, too late.

The Chancellor told the Commons: “Let me turn now to our high street businesses. I know that for them, a major source of concern is business rates.

“From 2026-27, we intend to introduce two permanently lower tax rates for retail, hospitality and leisure properties, which make up the backbone of high streets across the country, and it is our intention that is paid for by a higher multiplier for the most valuable properties.

“But the previous government created a cliff-edge next year, as temporary relief ends, so I will today provide 40% relief on business rates for the retail, hospitality and leisure industry in 2025-26, up to a cap of £110,000 per business.”

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But, for many struggling businesses in hospitality, retail and leisure, help is needed much more quickly.

Restaurant owners say they're "disappointed" with budget

Peter Kinsella and his wife Elaine own Lunya and Lunyalita, award-winning restaurants in Liverpool. They say the rises in employers' National Insurance contributions and the increase in the National Living Wage will be devastating for their sector.

"As an employee owned business we are bitterly disappointed with the budget overall," says Peter. 

"Already we, and other operators, are hauling back plans to spend on much needed new and more energy efficient equipment, refurbishments and general replacements - we are a huge sector and this has much broader negative economic impact.  

"We applaud the increase in the National Living Wage, it is much needed for everyone. But coupled with the increases in taxes on small business, the budget has the potential to be devastating on the sector, the high street, economic growth and in particular the loss of jobs. 

Rachel Reeves announced increase in employers’ national insurance contributions

"As a hospitality business, like every other, we are still paying back the huge sums of COVID business loans which were necessary for survival. It is unsustainable for this sector. The government should have backed up these changes with targeted support for our sector and small businesses in general. 

"We are the economic lifeblood of the economy. Big companies get all the attention (and grants and other government support). Small business and the hospitality sector gets nothing. 

"At a time when we should be celebrating being employee owned, a new dawn of economic policy an alleged interest in business growth, we get this ill thought out set of damaging policies for our sector and endless worry for the future."

His concerns are echoed by other food and drink businesses, including Paul Askew, chef patron and owner of The Art School restaurant in Liverpool.

He said: “The new government has increased costs for hospitality in today’s budget. And they’ve given nothing whatsoever in terms of VAT recalibration or support plus business rates relief is being reduced too, nor do they show any understanding of the situation we are all facing across the entire industry.

“2025 is going to be another fraught year, with upwards of £3billion in extra taxation to contend with on top of many other ongoing challenges that are not going away anytime soon.”

Similarly, food and drink retail businesses are also voicing their concerns.

Alice WainWright co-founded Rise Coffee Box, the number one voted coffee subscription box in the UK. She took part in Virgin StartUp’s Empower 100 programme which is an accelerator programme for underrepresented founders.

"Small business owners like me will be bitterly disappointed by Rachel Reeves' Budget," she says. "As a working mother, entrepreneur, and owner of a growing coffee subscription service, we’re proud to have built a brand with thousands of customers.

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"On the surface, our business looks promising, and we have ambitious growth plans. However, the new measures threaten to stifle this momentum and will force us to make difficult decisions in the next year.

"The hike in Employer’s National Insurance will stop us from making essential hires, and cuts to Business Rate Relief will pause our plans for high-street expansion.

“We had hoped for one or two initiatives that would encourage small businesses like ours to innovate and grow, but instead, we’re feeling squeezed from all sides. There's nothing in this budget that inspires growth for SMEs in the UK economy. 

"For a small business with big ambitions, our outlook has shifted from optimistic to uncertain."