The Fed’s Budget Recap

28/11/2025

The Fed reacted rapidly to Wednesday’s budget with National President Hetal Patel expressing concern about new costs that will impact independent retailers, including an above inflation increase in the Minimum Wage and uncertainty over changes to Business Rates Bills.

These changes come on the back of measures introduced in last year’s Budget, many of which were introduced in April and are only just being felt.

Overall, the new Budget saw tax increases of approximately £26 Billion of new taxes introduced with the Office of Budget Responsibility (OBR) forecasting less positive growth projections of only 1.4% and 1.5% in 2026 and 2027 – with Government Debt set to reach 83% of GDP, rising to £2.6 trillion in cash terms, with 1 in 10 Pounds of tax receipts being spent servicing interest on Government debt.

On the eve of the Budget, the Fed highlighted a survey of its members which indicated 52 per cent y would be cutting back their workforce in a response to last year’s Budget and in a similarly pessimistic more recent survey 71% reported a decline in trading levels between Q3 and Q2 of 2025, with many citing political uncertainty as a cause of the retail downturn.

By way of recap, key budgetary measures announced this week included:

• National Living Wage/Minimum Wage: From 1 April 2026, the new National Living Wage and Minimum Wage rates will all rise above inflation:
o Up by 4.1% to £12.71 per hour for workers aged 21 and over (currently £12.21 per hour)
o The NMW rate for 18–20-year-olds will also go up by 8.5% to £10.85 per hour (currently £10 per hour)
o Disappointing as both above inflation and the Fed has made representations calling for this to be kept in line with inflation, though increase is lower than last year.

• Business Rates Changes:
o Changes are complex, and will depend on property values, but with the loss of Retail, Hospitality and Leisure relief of 40% and a Business Rates revaluation, despite a reduction in Small Business Rate Multipliers to .0382 on properties worth up to £51,000, bills will increase for many.
o Other businesses which may be worth up to £15,000 in rates, currently receiving Small Business Rates relief. may lose support because of the upward revaluation in their property value in April 2026.

• Key Tax Measures Affecting Independent Retailers:
o Alcohol duty will increase with Retailers Price Inflation (RPI) from February 2026.
o Tobacco duty rises by RPI + 2% as a result of the Budget – with an extra rise of £2.20 per 100 cigarettes or 50g of tobacco
o A Vaping Products Duty (VPD) is being introduced from October with the extra hike in tobacco costs in place to maintain the differential between vape fluid and tobacco.

• Measures on Illicit Tobacco and Vapes:
o As the Fed demanded, ahead of the Budget includes extra measures to boost trading standards to help tackle illicit trade and protect legitimate retailers.
o 350 newly recruited investigators will serve as part of HMRC’s Fraud Investigation Service and “establishing a dedicated cross-government taskforce to develop an intelligence-led understanding of organised crime on our high streets”.
o Meanwhile, Rogue traders selling illegal vapes could face enhanced fines of £10,000 and a potential prison sentence

Hetal Patel, said: “The Fed has worked tirelessly to represent our members in recent months and share concerns about the cost of the Budget directly to Government and policymakers throughout the UK. Last month we wrote to the Chancellor expressing our continued concern about last year’s changes and the threat they place to our shops which are not just key employers providing many thousands of jobs around the country, but also focal points of the communities they serve. We have also written to several key Government ministers and met with many Members of Parliament and discussed the Budget.”

“We called for any increases the minimum wage to be kept in line with inflation. Unfortunately, higher wage bills will lead to more staff having their hours cut or even losing their jobs, with retailers having to take on even more hours themselves. Nonetheless, it was encouraging to see the Government respond to our demands for greater resourcing for trading standards, so as to help improve the high street and consequently support legitimate retailers. The Fed will continue our work to ensure small businesses are heard.

Political Engagement Coordinator, Doug Oliver, said: “This has been a tough year for independent retailers since the last Budget. The Fed will continue to represent the concerns of our members to the Westminster Government and key political decision makers at every level of devolved and national Government.

“Members seeking more information about the implications of the Budget, or on the scope of our Political Engagement work and efforts to stand up for our members, please get in touch on douglas.oliver@nfrn.org.uk or follow our website, social media pages and Your Fed magazine for updates.”