Employment Rights Bill
The Employment Rights Bill received Royal Assent therefore becoming law on 18 December 2025 but its wide range of changes are set to be phased in during 2026 and into 2027.
The bill was published in October 2024 and will be of biggest concern to pubs and bars when implementation of rules around casual and zero-hours workers change, ‘fire and rehire’ and ‘fire and replace’ practices will be ended and the strengthening of collective redundancy rights.
Between April and October 2026, it is expected rules on statutory sick pay and union access will come into effect while unfair dismissal protection – which will remove the six-month qualifying period – is expected to start on 1 January 2027.
In simple terms, employees can claim unfair dismissal from their first day, though employers can use defined probationary periods (up to nine months) with clear procedures to manage new hires.
Throughout 2027, further changes to enhanced bereavement leave, flexible working rights and mandatory gender pay gap/menopause action plans, will be implemented.
Hospitality businesses will need to review their policies as the gradual implementation of the bill takes place, particularly around probation and performance management.
Business rates
The RHL (retail, hospitality and leisure) multiplier change, more commonly referred to as business rates comes into effect on 1 April 2026.
The long-awaited reform of business rates was announced in the Autumn Budget on 26 November 2025 and the RHL multiplier will replace the RHL business rates relief.
The new five-tier permanent measure will include two lower multipliers specifically for non-domestic properties with rateable values below £500,000 – these are a small business RHL multiplier and a standard RHL multiplier for properties with a rateable value below £51,000 and between £51,000 and £499,999 respectively.
However, pub operators were fast to bemoan the business rates reform that will see many of them forced to take on much higher costs despite Chancellor Rachel Reeves claiming her Budget had delivered the “lowest taxes since 1991”.
National living wage and national minimum wage
A rise in the national living wage (NLW) and the national minimum wage (NMW) will come into force on 1 April 2026.
This means any staff members aged 21 and over will have to be paid £12.71 per hour – a 50p hike from April 2025.
Meanwhile, any workers aged between 18 and 20 will need to be paid £10.85 per hour, representing an 85p leap from before, and 16 to 17-year-olds and apprentices will receive £8 per hour – a 45p lift.
Inheritance tax
From 6 April 2026, UK inheritance tax (IHT) law is changing for qualifying businesses including pubs, with the introduction of a £2.5m cap on 100% Business Property Relief (BPR) per individual.
The announcement was made on 23 December 2025 with an adjustment upwards from the previous cap of just £1m.
Currently, qualifying trading businesses can receive 100% BPR, meaning they can be passed on entirely free of IHT. From April 2026, this full relief will be capped at the first £2.5m of value for each individual’s estate.
Any value exceeding the £2.5m threshold will receive 50% relief. This means that portion will effectively be subject to an IHT charge of 20% (half of the standard 40% rate).
The £2.5m allowance is now transferable between spouses and civil partners, similar to the existing nil-rate band. This allows a couple to potentially benefit from a combined £5m allowance.
For pubs that operate as qualifying trading businesses, these changes could mean a substantial tax bill, potentially threatening the business’s continuity if not planned for.
As an example, a pub business valued at £4m, the first £2.5m would receive 100% BPR relief while the remaining £1.5m would receive 50% relief, leaving £750,000 exposed to the 40% IHT rate, resulting in a £300,000 tax bill.
Owners of pubs and other family businesses should review their succession plans and wills with a professional adviser to mitigate the impact.
Alcohol duty
Alcohol duty will be uprated in line with the Retail Price Index at 3.66% on 1 February 2026.
This means all alcoholic drinks sold in pubs and bars will be affected but there is a lower duty rate for small businesses that manufacture alcoholic beverages below 8.5% ABV that are not produced under licence on a small producer premises that makes below 4,500 hectolitres of pure alcohol per year – this is the Small Producer Relief (SPR).
Small distilleries have campaigned to the Government for a similar relief scheme too.
Martyn’s Law
Martyn’s Law – otherwise known by its official title as the Terrorism (Protection of Premises) Bill, became law in April 2025 but is expected to not to come into full effect until around April 2027.
The bill will impose requirements for hospitality sites and events, among others, to increase their preparedness for, and protection from, a terrorist attack by requiring them to take proportionate steps, depending on the size and nature of the activities that take place at the premises.
The lack of pace in implementation allows time for the Security Industry Authority to be installed as a regulator for the scheme and for venues and events to prepare for it via guidance from the Home Office.
Deposit Return Scheme
The much-mooted Deposit Return Scheme (DRS), which will have implications for hospitality sites using single-use drinks containers made from PET plastic, steel and aluminium, ranging from 150ml to 3 litres in volume (glass is not included in the initial scheme for England, Scotland and Northern Ireland), will not go live until October 2027.
Scotland’s DRS was set to go live in August 2023 but operators and trade bodies voiced protests against the project that has led to pubs not being affected in 2026.
World Cup 2026 consultation
The football World Cup 2026 takes place between 11 June and 19 July in Mexico, Canada and the US so kick-off times will be later in the UK.
Although no official changes have been set by Government when it comes to potentially allow pubs and bars to stay open later, a consultation is taking place.
However, pubs and bars may want to use Temporary Event Notices (TENs) that allow later opening hours if needed and this is a more certain way of knowing ahead of time rather than relying on the results of the consultation.
