Key take aways from the 26 November Budget

The Chancellor of the Exchequer delivered her Budget on 26 November. Here, lawyers from our Corporate, Food & Drink, Agriculture & Rural Affairs and Real Estate teams look at what it means.

Alisa Sweeney, Head of the Food & Drink sector at Thomson Snell & Passmore comments:

“This Budget brings much-needed stability for the UK hospitality sector. At a time when operators are battling sustained cost pressures, the Government’s decision to maintain targeted business-rates support for retail, hospitality and leisure is a welcome relief and prevents what could have been a severe tax shock for venues across the country. Crucially, the new tax rises have been directed away from everyday hospitality businesses, allowing pubs, restaurants, bars and hotels to plan with greater confidence.

“The news that the Government will explore further planning reforms to make it easier for hospitality and high street businesses to expand and grow is also welcome.  While the sector still faces long-standing challenges, today’s measures offer reassurance and a more predictable trading environment as we move into 2026.”

Jason Varney, Partner in the Corporate M&A team adds:

“The extraordinary leak of the OBR Report prior to the Budget announcement is in stark contrast to the rather unextraordinary Budget. From a business perspective there were some notable points. The reduction of capital gains tax relief on disposals to Employee Ownership Trusts from 100% to 50% will materially affect succession planning for owner-managed businesses, increasing the tax cost of moving to employee ownership. At the same time, lowering the main rate of the writing-down allowance in corporation tax reduces the value of capital investment reliefs, particularly for asset-intensive sectors.

“The new £2,000 cap on National Insurance-free salary-sacrificed pension contributions limits an important tool used by employers to manage reward packages efficiently, while the two-percentage-point increase in dividend tax further raises the total tax burden on shareholders. Collectively, these measures mark a shift towards a more constrained corporate tax landscape, and businesses will need to reassess their structuring, remuneration and investment strategies accordingly.”

Esther Lee, Partner in the Agriculture & Rural Affairs team says:

“Although the changes announced in last year’s Budget, which will introduce a £1 million cap for Inheritance Tax on assets that are able to attract 100% Agricultural Relief and Business Relief (with 50% relief on the value of eligible assets over £1 million), will still be introduced in April 2026, there is one long-awaited concession in today’s budget. The £1 million cap will now be transferrable between spouses and civil partners. 

“This is welcome news but will not go far enough to dampen the concerns of farmers who are worried about how the farming business will be able to afford to pay the Inheritance Tax.

“Further clarification is also still needed on the changes which are due to come in to effect in April 2026.”

Joanne Wright, Partner in the Real Estate team concludes:

“This Budget marks a shift in the tax and regulatory landscape for the real estate sector. For landlords, the picture is mixed. While the Budget avoids direct new taxes on commercial landlords, it does increase the tax burden on income from property and investment, including higher rates on dividends and savings income and tighter reliefs on salary-sacrifice pension schemes. These changes will increase financing and holding costs for many property investors, particularly highly leveraged ones.

“The decision to increase business rate charges on ‘the most expensive properties such as warehouses used by large online retailers’ — a measure explicitly set out in the Budget — will affect logistics landlords disproportionately and may reduce headroom for rental growth in that sector.

“In practical terms, investors and companies will need to revisit their structuring assumptions, projected yields and capital allowances models to reflect a tax framework that is clearly tightening around passive income and large high-value assets, which is to be introduced over the next few years.”