What does this Budget mean for your business, and what should you do about it?

The Chancellor has delivered Budget 2026 against a backdrop that will feel familiar to businesses across the home and gift industry: pressure on household finances, high operating costs, uncertainty around energy and continued challenges around the overall cost of doing business.

Published on 28 October, the Budget contains measures covering business rates, wages, fuel, energy, online marketplaces, investment and business support.

There are measures we welcome and others that will create additional pressure. Crucially, businesses experience these changes cumulatively.

Wages, rates, energy, freight, tax, regulation and consumer demand ultimately come together in one place: your bottom line.

Here is our practical HGA guide to navigating Budget 2026.

1. Business Rates

Potentially significant news for independent retailers

One of the most directly relevant announcements for our retail members concerns business rates.

From 1 April 2027, the Small Business Rate Relief thresholds for qualifying retail, hospitality and leisure properties in England will rise:

• The threshold for 100% relief increases from £12,000 to £18,000.
• The upper threshold for tapered relief increases from £15,000 to £21,000.

The Government says a further 70,000 retail, hospitality and leisure businesses will pay no business rates. It has also announced transitional support, including a two-year real-terms bills freeze for qualifying properties.

Business rates are devolved. Members with premises in Scotland, Wales or Northern Ireland should check the arrangements that apply locally.

HGA view: This is a welcome intervention. Independent retailers play an enormous role in our high streets, communities and the route to market for British home and gift brands. Reducing fixed costs should provide qualifying businesses with some much-needed breathing space.

2. Employment Costs

Plan now for the wider payroll impact

The Budget confirms increases of 3.9% to the National Living Wage and National Minimum Wage rates. For retailers, warehouses, manufacturers and other businesses with substantial staffing costs, this matters.

HGA strongly believes in rewarding and retaining good people. Businesses also need to understand the total cost of employment, rather than looking at an hourly wage in isolation.

Undertake a workforce cost review covering:

• Employees paid at or close to the statutory minimum.
• The wider payroll impact, including associated employment costs.
• Pay differentials between junior and experienced colleagues.
• Overtime and seasonal staffing.
• Recruitment plans.
• Margins and productivity.

HGA view: For many SMEs, this remains one of the Budget’s biggest concerns. Businesses want to create opportunities, but employment costs influence decisions about recruitment, hours, investment, automation and growth.

3. Fuel Duty and Mileage

Welcome relief for a sector that moves products and people

The Budget extends the temporary 5p-per-litre fuel-duty cut and defers the planned RPI increase until 1 July 2027.

That matters to our industry. Products need transporting, sales agents travel, retailers take deliveries, brands exhibit at trade shows and suppliers visit customers.

When reviewing your 2027 budgets, revisit:

• Delivery and distribution costs.
• Fleet expenditure.
• Mileage and field sales expenses.
• Exhibition logistics.

4. Online Marketplaces and VAT

An important change for fair competition

From October 2027, the Government plans to extend online marketplace VAT liability rules to UK businesses.

The published tax detail says marketplaces will collect VAT on relevant sales by UK VAT-registered businesses and other UK businesses meeting a £90,000 minimum annual sales threshold per platform. It states that personal sales, second-hand goods and business-to-business transactions will be excluded.

The Government says revenue raised will be reinvested into high streets through business-rate reductions.

For HGA, fair competition matters. Responsible businesses investing in their tax and compliance obligations should be able to compete on a level playing field. This also sits alongside our wider advocacy on overseas sellers and low-value imports, although this particular measure extends the rules to UK businesses.

5. Business Energy

Manufacturers should check eligibility carefully

There is potentially significant help for some HGA manufacturers through the British Industrial Competitiveness Scheme (BICS).

The scheme is intended to support more than 10,000 eligible manufacturing businesses in Great Britain, with electricity bill reductions of up to 25%. Support begins from April 2027, with individual scheme components following the timetable in the applicant guidance.

Budget documentation also sets out an additional payment in 2027 to reflect support eligible businesses would have received had the scheme been introduced sooner.

The Budget also announces a freeze in the main Climate Change Levy rate on electricity from 1 April 2028. Check the detailed energy measures with your adviser when assessing longer-term costs.

6. Microbusinesses

A boost for some very small businesses

The Income Tax Trading Allowance will increase from £1,000 to £3,000 from 6 April 2027.

This may be particularly relevant to some very small creative businesses and people beginning to generate trading income.

Check your individual tax position against HMRC guidance or with your accountant. Do not assume the allowance removes wider tax or reporting obligations.

7. Imports and Tariffs

Do not overlook changes to duty treatment

The Budget extends selected tariff suspensions and confirms suspensions arising from the 2025–26 application window, including products across chemicals, plastics, fibres and metals.

A new application window for business tariff suspensions is scheduled for 11 November 2026 to 3 February 2027.

8. Consumer Spending

Some household support, but stay close to your customer

Home, gift and lifestyle businesses are highly exposed to discretionary spending. Changes affecting household finances therefore matter to our members.

The Government is retaining the VAT cut on domestic electricity until July 2027, which it expects to take approximately £50 off the annual Ofgem price cap in April 2027.

It has also announced a £100 Household Energy Payment from January 2027 for households in England in council tax bands A–D, with up to 20 million households expected to be supported.

However, that should not automatically be translated into a retail sales boost. The OBR forecasts growth of 1.2% in 2026, slowing to 1.0% in 2027.

For retailers and consumer brands, watch:

• Average transaction values and conversion.
• Reliance on promotions.
• Gifting occasions and price-point performance.
• Stock turn and repeat purchasing.

Consumer confidence will not necessarily move in the same direction as headline economic statistics.

9. Your Budget Health Check

What should HGA members do now?

Do not panic, do not ignore it and do not look at individual measures in isolation. Work through these eight areas.

10. Your Next Management Meeting

Five questions every business owner should ask

1. What will this Budget add to or remove from our costs?
   Put a pound figure against it.
2. Does our 2027 budget still work?
   Review assumptions before the new financial year.
3. Where is our margin under the greatest pressure?
   People, property, freight, energy, product costs or discounting?
4. Where could investment improve productivity?
   Consider technology, staff development, stock management and customer acquisition alongside cost control.
5. What do we need HGA to tell Government?
   Please tell us what would make a difference.

What HGA will do next

This Budget is not the end of the conversation. It reinforces the importance of the areas HGA is already bringing to the fore.

Good advocacy means making sure our industry is heard.