Key Legislation Changes that could impact your business in 2026

A number of legislative changes are set to come into effect in 2026, affecting operating costs, staffing practices, licensing requirements, and long-term business planning. Here’s a breakdown of the most important developments and what they mean for hospitality businesses.

Employment Rights Act

An update to the Employment Rights Act (formerly the Employment Rights Bill) will introduce sweeping changes to workplace rights and employer obligations.

Key Changes Affecting Hospitality Employers

• Statutory Day-One Rights: From April 2026, employees will be entitled to several statutory rights – such as statutory sick pay and paternity leave – from their first day of employment.
• Unfair Dismissal Qualification: The Government has indicated that unfair dismissal claims will be possible after six months’ service rather than from day one, easing concerns among smaller hospitality employers about potential surge in tribunal claims.
• Zero-hours and Contract Reforms: Further protections for workers on unpredictable or zero-hours contracts are expected later in 2026 or into 2027. These include the right to request guaranteed hours, limits on exclusivity clauses, and rules about notice and compensation for shift changes.
• Fair Work Agency: A new enforcement body, the Fair Work Agency, is set to be established to oversee compliance with the expanded employment rights regime. Hospitality employers will need to update contracts, HR procedures, and scheduling systems to stay compliant. Training on probation, dismissal practices, and employee entitlements will be essential.

Business Rates Reform and Tax Changes

New Business Rates Multipliers – April 2026

A permanent overhaul of the Retail, Hospitality and Leisure (RHL) business rates relief system comes into force on 1 April 2026, replacing temporary schemes with tiered multipliers based on rateable value.

• Smaller Venues (<£51k RV): Lower multiplier, reducing rates bills for many micro pubs and cafés.
• Mid-sized Venues (£51k–£499k RV): Standard RHL multiplier offers support but may not fully offset revaluation increases.
• Larger Properties (>£500k RV): Higher multiplier than the standard rate, which could mean higher bills for bigger hotels and venues.

Business Property Relief and Inheritance Tax

From 6 April 2026, full Business Property Relief (BPR) from inheritance tax will be capped at £2.5m per individual, with amounts above this threshold receiving only 50% relief. This has implications for succession planning in family-run pubs and hospitality businesses.

Minimum Wage Increases

From 1 April 2026, national minimum wage and national living wage rates will rise, increasing labour costs. For example, workers aged 21 and over will have a higher hourly minimum of £12.71.

As a result, employers should budget for higher wage costs in 2026 and ensure payroll systems reflect the updated rates to avoid non-compliance penalties.

Licensing Reform and Regulatory Framework

New National Licensing Policy Framework

In late 2025, the Government published a new National Licensing Policy Framework aimed at modernising and making the licensing regime more flexible and growth-friendly for hospitality and leisure venues.

This framework emphasises:

• Balancing public safety and investment in local economies.
• Supporting high streets with a more permissive approach where appropriate.

Post-Temporary Alcohol Off-Sales Provisions

The temporary provision that automatically granted off-sales rights to on-licensed premises expired on 31 March 2025. Hospitality businesses continuing takeaway alcohol sales must now have those permissions explicitly on their licence.

If your venue has been relying on automatic off-sales permission, review your licence conditions now to avoid enforcement action.

Alcohol Duty Increase

Alcohol duty rates will be increased in line with inflation on 1 February 2026, affecting the price of drinks sold in pubs, bars, and restaurants.

Key preparations to make for these changes:

• Review Employment Contracts and Policies
  Ensure job contracts, handbooks, and HR systems reflect evolving rights, including minimum wage changes and enhanced employee protections. Engage with legal or HR professionals early.
• Understand Your Business Rates Position
  Analyse your rateable value and the new multipliers. Where feasible, challenge valuations and explore available reliefs.
• Check Licensing Compliance
  Update all licence permissions – especially for off-sales – and consider future applications in light of the new licensing policy framework.
• Plan for Wage Bill Increases
  Factor the increased national living wage into pricing and staffing budgets to maintain margins without compromising service quality.
• Consult Tax and Succession Advisors
  With BPR limits changing, family-run venues and high-value assets should seek specialist tax planning advice to mitigate inheritance tax liabilities.

2026 is set to be a year of significant legislative change for the UK’s independent hospitality sector. Those who are proactive with these reforms and access professional support where needed will be best positioned to adapt and thrive in a shifting industry.