UK Government Budget 2025 announcements
The Chancellor of the Exchequer delivered the UK Budget 2025, for the coming year on 26th November. You can read the associated HM Treasury press release here.
OBR estimates forecast GDP to grow by 1.5% in 2025, above previous forecasts. However, the outlook for subsequent years has been downgraded from earlier projections.
Key announcements relevant to the Scottish convenience sector include:
Hourly rate for National Minimum Wage and National Living Wage (from 1st Apr 26):
Over 21 will rise by 50p (4.1%) to £12.71.
18-20 will rise by 85p (8.5%) to £10.85.
Under-18s and apprentices will rise by 45p (6%) to £8.
Milkshakes, coffee drinks, and milk substitutes are to be included in the Soft Drinks Industry Levy (SDIL). Plans are also in place to reduce the maximum amount of sugar allowed in drinks from 5g to 4.5g per 100ml. The SDIL will also be uprated on 1 April 2026. The Levy will be increased in line with Consumer Price Index plus one fifth of the ‘catch-up’ increment to reflect the 27% CPI increase between 2018 and 2024.
There will be a freeze on tax thresholds for personal tax and employer National Insurance contributions until 2031. However as expected, there will be no increase to income tax (the Scottish Government also has powers to change income tax levels in Scotland).
Reduction in the writing down allowance main rate in Corporation Tax. The government will double the penalty for taxpayers submitting a Corporation Tax return late from 1 April 2026. This will be legislated for in Finance Bill 2025-26.
The freeze to the 5p fuel duty will continue for a further five months until September 2026, followed by staged increases.
Alcohol duty will be uprated with the RPI on 1 February 2026 to maintain its current real-terms value.
Duty rates on all tobacco products will increase by RPI inflation +2 ppts. These changes will take effect from 6pm on 26 November 2025. The one-off increase of £2.20 per 100 cigarettes or 50g of other tobacco products and annual uprating of tobacco duty by RPI + 2 ppts next year will take effect from 1 October 2026 and will be included in Finance Bill 2025-26.
The government will legislate for the new Vaping Products Duty to be introduced from 1 October 2026 at a flat rate of £2.20 per 10ml applied to all vaping liquid, alongside the Vaping Duty Stamps scheme to support compliance.
The government will simplify administration of the DRS by removing the requirement for individual producers to account for VAT on unreturned deposits. Instead, this will be done by the Deposit Management Organisation.
In addition, the Chancellor made a commitment to lower tax rates for retail properties (in England) funded through higher rates on properties worth £500,000 or more, such as warehouses used by online retail giants (the Scottish Government sets Non-Domestic rates in Scotland).
The UK Government also announced an additional £820m for the Scottish Government block grant. The Scottish Government Budget will be announced on 13th January 2026.