Budget 2026 for pubs: no VAT cut, 2.3p on a pint in February, and a rates cut that roughly pays for the wage rise

No VAT cut. The Budget on 28 October 2026 left hospitality VAT at 20%, so the 40p-a-pint ask didn't land. Duty goes up on 1 February 2027, about 2.3p on a 4.5% draught pint, 2.7p once VAT is on it. The minimum wage goes to £13.21 in April. Against that, the pub business rates relief goes from 15% to 35% from April 2027, which the Treasury says is worth more than £3,000 a year to the average pub. For a typical wet-led local the rates saving about covers the wage rise. The duty is the bit you'll need to price for.

I priced up the trade's asks before the speech in what each Budget ask is worth per pint. Here's what we actually got, from the government's own rate tables where they're published, and from the Morning Advertiser's Budget-day reports where they aren't yet. Same pub as always: a £5.34 pint, 800 pints a week, about £2.45 of gross profit a pint.

What changed, and what it's worth

Budget 28 October 2026, the pub measures (pence and pounds are my arithmetic from the sources below)

Measure	From	Per pint or per hour	Per week for a typical pub
Hospitality VAT stays at 20%	No change	The 40p ask didn't happen	Nothing
Draught beer duty £19.45 to £20.34 per litre of alcohol	1 Feb 2027	+2.3p on a 4.5% pint, +2.7p with VAT	About £18 on 800 pints, before VAT
National Living Wage £12.71 to £13.21	1 Apr 2027	+50p an hour, about 57.5p with employer's NI	About £57.50 per 100 staff hours
Pubs relief on business rates 15% to 35%	Apr 2027	Not per pint	About £58, on the Treasury's £3,000-plus average
Small business rates relief: 100% up to £18,000 rateable value, tapering to £21,000	Apr 2027	Not per pint	The whole bill, if you're under £18,000
Machine Games Duty 25% on machines over £1 a play or £100 prize	Apr 2027	A normal category C pub machine stays at 20%	Nothing for most pubs

Duty: about 2p a pint, in February

The government's rate table has every alcohol duty band going up by about 4.6% on 1 February 2027. The one that matters most to us, draught beer and cider from 3.5% to 8.4%, goes from £19.45 to £20.34 per litre of pure alcohol. On a 4.5% pint that's 49.7p of duty becoming 52.0p. On a 4% pint it's 44.2p becoming 46.2p. Non-draught beer goes from £22.58 to £23.61, so bottles and cans go up a touch more.

Spirits over 22% go from £33.99 to £35.54. That's about 1.5p more on a 25ml single at 37.5%. Wine between 8.5% and 22% goes from £30.62 to £32.01, about 3p more on a 175ml glass at 12.5%. The Treasury also put £10m a year into Small Producer Relief for small brewers and cider makers, which helps the micro breweries on your guest list more than it helps your lager.

You don't pay duty yourself, your brewery or wholesaler does, and it'll arrive in their February price list. Check every line on it goes up by the duty and not a penny more. I set out how in tracking supplier price rises on invoices, and the full duty tables are in the alcohol duty guide.

Wages and rates: one roughly pays for the other

The government says the National Living Wage goes up 3.9% to £13.21 an hour from 1 April 2027. That's 50p an hour, plus 7.5p of employer's National Insurance at 15%. A pub using 100 staff hours a week at the living wage pays about £57.50 a week more. That's 23 pints of gross profit.

On rates, the pubs and live music venues relief that is 15% this year goes to 35% from April 2027, the 20-point increase announced in July. The Morning Advertiser reports the Treasury's estimate as more than £3,000 a year for the average pub, about £58 a week. Smaller pubs do better still. The threshold for full small business rates relief goes from £12,000 to £18,000 of rateable value, tapering out at £21,000, and the Budget documents say 3,500 pubs will pay no business rates at all from April 2027. Other hospitality bills are capped at inflation for two years.

Put those side by side and, for an average pub with about 100 staff hours a week, the rates saving and the wage rise come out within 50p of each other. If you run more hours than that, the wages win. If you're under £18,000 rateable value, the rates win easily. The business rates relief guide and the living wage guide have the working for your own numbers.

Two things that sound better than they are

The 25% electricity bill discount is for electricity-intensive industry and its supply chains, under the British Industrial Competitiveness Scheme. Hospitality isn't named in it. Don't expect it on your bill. And the electricity VAT cut that was extended is the one worth about £50 off the household price cap, not your business bill.

The fruit machine rise sounds like bad news but mostly isn't. A pub machine is category C, £1 a play and £100 top prize, and that stays in the 20% band. The 25% hits machines above that. Details in the fruit machine guide.

My take

The trade asked for VAT and didn't get it, and that's the one that would have changed the maths. What we got is a rates cut that roughly pays for the wage rise, and a duty rise that lands on 1 February, the week after Christmas has emptied everyone's pockets.

So the job now is February. A 2.3p duty rise is 2.7p at the bar, and nobody prices a pint in 3p steps. If you take 5p on draught in February you've covered the duty and the first bit of April's wage rise, which is the honest reason to do it. If you'd rather hold your prices through the winter, that's about £18 a week on 800 pints, and you can do it knowingly. Either way, decide it before the price list lands rather than after. I went through how to put prices up without losing the regulars in how to put pub drink prices up.

Common questions

Did the 2026 Budget cut VAT for pubs?

No. The Budget on 28 October 2026 left hospitality VAT at 20%. A cut to 10% would have been worth about 40p on a £5.34 pint.

How much will beer duty go up in February 2027?

Draught beer from 3.5% to 8.4% goes from £19.45 to £20.34 per litre of pure alcohol on 1 February 2027. That's about 2.3p more duty on a 4.5% pint, 2.7p with VAT.

What is the minimum wage from April 2027?

The government says the National Living Wage rises 3.9% to £13.21 an hour from 1 April 2027, up 50p from £12.71.

What business rates relief do pubs get from April 2027?

Pubs and live music venues relief rises from 15% to 35%, which the Treasury estimates at more than £3,000 a year for the average pub, and full small business rates relief now covers rateable values up to £18,000, tapering to £21,000.

Does the Machine Games Duty rise affect pub fruit machines?

Mostly not. A category C pub machine (£1 a play, £100 top prize) stays at 20%. The 25% rate applies to machines with higher stakes or prizes from April 2027.