Chancellor John Healey's first Budget, delivered on 28 October, moved two numbers that land directly on a small retail or hospitality business in England: it raised the point at which High Street shops stop paying business rates altogether, and it raised the minimum wage. Both are now confirmed, not speculated. The read business owners are giving it, in their own words to the Guardian the day after, is the one worth taking seriously: a rates cut and a wage rise arriving in the same speech are not automatically good news together, because one is a fixed saving on your premises and the other scales with every hour on your payroll. For most of our hospitality and retail clients, the second number will matter more than the first.
What actually changed, in the government's own figures
On business rates, the Ministry of Housing, Communities and Local Government's Business Rates Information Letter 8/2026, published on Budget day, sets out the detail behind the headline. From 1 April 2027, the Small Business Rates Relief thresholds for qualifying Retail, Hospitality and Leisure (RHL) properties in England rise from £12,000 to £18,000 for full relief, and from £15,000 to £21,000 for the point where tapered relief disappears completely. Eligible properties also get a two-year real-terms bill freeze, with increases capped at CPI inflation in 2027/28 and 2028/29. Pubs, social clubs and all but the largest live music venues get a further 20% relief on top of the 15% already running, taking their total to 35%. Vape shops and Adult Gaming Centres are carved out of both reliefs entirely. The small business RHL multiplier for 2027/28 is confirmed at 39.7p.
On pay, the government has accepted the Low Pay Commission's recommendations in full. The National Living Wage, for workers 21 and over, rises from today's £12.71 to £13.21 an hour from April 2027 — a 50p, 3.9% increase. The 18-20 rate rises from £10.85 to £11.27, and the 16-17 and apprentice rates rise from £8.00 to £8.31, each also up 3.9%. Because every band moved by the same percentage rather than younger rates closing the gap, the cash difference between an 18-20-year-old and a 21-year-old actually widens slightly, from 42p to 44p an hour. The Guardian also reports the Budget confirmed the clampdown on VAT dodging by online marketplaces first reported on 14 October, which we covered in detail in our piece on the marketplace VAT plan — that mechanism is now Budget policy, not a proposal.
The worked numbers: a small café's rates saving against its wage bill
Take an illustrative English café with a rateable value of £16,000, trading as a qualifying RHL property, and employing eight staff on the National Living Wage working 30 hours a week across 52 weeks — 12,480 paid hours a year between them.
Under the rates system before this Budget, a £16,000 rateable value sat above the old £15,000 taper ceiling, so this café received no Small Business Rates Relief at all and paid full rates on that value. From 1 April 2027, the same £16,000 falls comfortably inside the new £18,000 full-relief threshold, so its business rates bill drops from roughly £16,000 × 39.7p = £6,352 a year to zero. That is a genuine, one-off saving worth having.
But its wage bill moves the other way. Those 12,480 hours cost £12.71 an hour today, or £158,606 a year. At £13.21 an hour from April 2027, the same hours cost £164,861 — £6,255 more, before a penny of employer National Insurance. Add employer NICs at 15% above the £5,000 secondary threshold per employee, unchanged in this Budget, and that pay rise alone adds a further £938 or so in employer NICs on top. Put the two sides together: the rates saving of £6,352 and the raw wage increase of £6,255 very nearly cancel out on their own — and once NICs is added, this illustrative café tips from a wash into a net cost of several hundred pounds a year, before any growth in trade, hours or headcount. That is the arithmetic behind James Nye, managing director of Norfolk's Anglian Country Inns, telling the Guardian the relief is "like letting the tyres down and then handing you a pump."
What this means for you, depending on where you trade and who's on your payroll
If you trade in England and your premises' rateable value sits anywhere between £12,000 and £21,000, this is a real and worthwhile change to check, because it is the difference between paying something and paying nothing, or between a steep taper and a gentle one. Dean Richmond, who runs the 159-store Pets Corner chain, told the Guardian he does not expect to benefit much from the new threshold because his stores sit above it — a useful reminder that this relief is sized for genuinely small premises, not multi-site retailers.
If you trade in Scotland, Wales or Northern Ireland, none of the rates figures above apply to you at all. Business rates are devolved, and MHCLG's letter is addressed specifically to English billing authorities. Check our Scotland, Wales or Northern Ireland business rates guides for what actually applies where you are — the minimum wage rise, by contrast, is not devolved and lands on every UK payroll the same way.
If you run a pub, bar or hospitality business with a meaningful headcount on or near the National Living Wage, budget on the wage rise outweighing the rates relief, as the worked example above shows, unless you also qualify for the extra pub and live music venue relief taking total support to 35%. If your team is mostly salaried and above the Living Wage already, the rates change is closer to a clean win with no offsetting payroll cost.
What to actually do this week
Look up your premises' current rateable value on the VOA's Check and Challenge service, and work out which side of the new £18,000 and £21,000 lines you now sit on — it changes your planning even though the new thresholds don't bite until 1 April 2027. Then model the minimum wage rise against your own headcount and actual hours, not an illustrative eight-person team, because the net effect genuinely varies by business; our payroll team can run that projection properly against your real numbers. If you are in Scotland, Wales or Northern Ireland, don't assume the rates relief reaches you at all. And if you sell through an online marketplace, revisit the VAT mechanics we set out on 14 October, since that plan is now confirmed rather than reported.
This is exactly where our Business Pulse advisory service earns its keep: putting both sides of a Budget like this one against your actual figures, rather than the headline either way.
What is still uncertain, and when we'll know
MHCLG's letter is explicit that the detailed regulations and guidance implementing the rates changes will follow "in the coming weeks," and the precise legal definitions of "vape shop" and "Adult Gaming Centre" for exclusion purposes are still to be published. The Low Pay Commission's full report, setting out the reasoning behind the 3.9% figure, is due "in the new year" — the rates themselves are confirmed, but the evidence behind them is not out yet. The marketplace VAT crackdown is confirmed in principle but its detailed mechanics await the Finance Bill. Treat the rates and wage figures in this piece as settled, and everything else as still to be published.