2025 will see UK employers face a lot of changes, particularly when it comes to costs. Between a rising minimum wage, NIC increases, and a sea of other changes, this year will be difficult to navigate for many hospitality businesses. However, it is not all bad news- there is a series of reliefs available for eligible businesses.
Here, we’re breaking down the key changes you need to know about for your business this year, and how to prepare your business for the upcoming year.
Changes Coming in 2025
Minimum Wage Increase
From April 1st, the minimum wage will increase from £11.44 to £12.21 for everyone over the age of 21. This is set to be the largest rise in the minimum hourly wage on record, with a £2,500 annual increase for an eligible full-time worker.
For 18-20 year olds, the minimum wage will rise from £8.60 to £10. For 16-17 year olds, the minimum wage will rise from £6.40 to £7.55. With this comes a rise in the national living wage to £12.60 everywhere except London, where it’s risen to £13.85.
NICs Increase
From April 6th, employer NICs are set to rise from 13.8% to 15%. As well as this, the secondary threshold (rate at which an employer begins to pay NICs for an employee) will drop from £9,100 to £5,000 annually.
The Employment Allowance, however, will also rise from £5,000 to £10,500 to help businesses relieve their NIC liability- a welcome rise for employers. The previous eligibility threshold of £100,000 is also being eliminated, meaning more businesses can avail of this relief to help combat costs.
Another way to offset rising NIC costs is to implement a tronc system. This separates tips from your business bank account/payroll, eliminating NIC liability on tips and gratuities. To learn more about tronc, chat to our team here.
Statutory Sick Pay and Family Pay
As well as an increase in employer NICs, statutory sick pay (SSP) and statutory family pay will also increase on April 6th. SSP will rise from £116.75 to £118.75 weekly. Eligible ill workers will receive this rate or 80% of their weekly wages- whichever is lower.
The statutory maternity, paternity, adoption and shared parental pay will increase from £184.03 to £187.18 a week.
Visa and Sponsorship Fees
Visa and sponsorship fees are also set to increase, on April 9th. There are different rate changes across various kinds of visa and sponsorships, which can be found here.
The Employment Rights Bill (ERB)
The Employment Rights Bill was published in October 2024, introducing a number of reforms to employment rights across the UK. While most of these reforms are set to come into effect in 2026, consultations are due to take place this year, with the bill expected to be set into law no later than summer 2025.
The bill will see reforms such as a “day one” right against unfair dismissal, restrictions on zero-hour contracts, changes to neonatal care leave, and an onus on employers to prevent and report harassment in the workplace.
These changes will see a significant reform in employee rights, which employers will need to be prepared to implement.
Changes to Alcohol Duty and Licensing Regulations
The 2025 Budget introduced adjustments to alcohol duty and licensing regulations, which will impact a broad range of establishments, from bars and restaurants to pubs.
In an effort to reduce administrative burdens, the government is simplifying alcohol duty categories, making it easier for businesses to manage their costs related to alcohol. The Budget also introduces a reduction in duty on low-alcohol drinks to promote healthier drinking choices. This provides an opportunity for businesses to cater to the rising demand for low- and no-alcohol beverages, which have seen a notable increase in popularity.
Reliefs Available for Hospitality Businesses
The Employment Allowance
As we mentioned above, the Employment Allowance is set to increase from £5,000 to £10,500. This scheme helps businesses to relieve some of their NIC liability. The previous eligibility threshold of £100,000 has also been eliminated, meaning more businesses can avail of the supports.
Revised VAT Rates for Hospitality Businesses
One of the main points of interest for the hospitality sector is the VAT rate. In recent years, fluctuations in VAT for hospitality have significantly impacted profit margins, so stability in this area is critical.
The government will maintain a reduced VAT rate specifically for hospitality businesses, aiming to ease operational costs. This measure is expected to boost consumer spending, as customers may find dining out and staying in hotels more affordable. A pilot programme will test reduced VAT rates during quieter months, intended to increase business during traditionally low-traffic times, such as the post-holiday period.
For hospitality employers, these adjustments may ease pricing pressures, allowing them to offer competitive rates and maximise revenue without compromising profitability.
Focus on Energy Efficiency and Sustainable Practices
The hospitality industry consumes significant energy across kitchen operations, lighting, heating, and other essentials. The 2025 Budget included incentives aimed at helping businesses transition towards sustainable practices.
Hospitality employers can access grants and low-interest loans for eco-friendly upgrades, such as LED lighting, efficient kitchen equipment, and improved insulation. Businesses investing in sustainable solutions, such as solar panels, water-saving systems, and recycling programs, are eligible for increased tax relief under the Budget’s green incentives.
These measures can result in substantial cost savings over time by reducing energy bills and enhancing a business’s appeal to environmentally conscious customers.
