Hospitality enters April 2026 in a fragile position. Insolvencies in pubs, restaurants, bars and hotels remain well above pre‑pandemic levels, and the sector is about to absorb another round of hospitality cost increases announced in the Autumn Budget 2025. These include further increases in wage costs, higher employer National Insurance contributions and changes to business rates as temporary reliefs come to an end.
In this article we look at what is changing from April 2026, why it matters particularly for hospitality, what UKHospitality and its Chair, Kate Nicholls, have said about the impact, and the latest insolvency data. We then outline the practical steps that operators can take if cashflow becomes difficult to manage.
A sector already under strain – why hospitality insolvencies remain elevated
Official insolvency statistics show that companies in the accommodation and food service sector have been failing at historically high levels since the pandemic. Recent annual data that 3,353 accommodation and food and drink businesses entered insolvency proceedings in the year to December 2025, and the pressure is not relenting
The cause of these insolvencies is a familiar mix of pressures:
- Higher energy, food and labour costs
- Weaker consumer spending as household budgets are squeezed
- The unwinding of pandemic‑era support and repayment of legacy debts
- Tougher creditor behaviour, including from HMRC
- Structural changes
As Antony Batty our Managing Director says:
“In hospitality, it’s not been a monsoon with its seasonality but a perfect storm of economic and structural challenges.
Food prices have rocketed by 26% and energy by some 240% between 2012 and 2023.
The “stay home” habit has solidified so that decisions to eat out and stay away are deferred until a time, whenever that’ll be, when there is no cost of living crisis.
Then, there still remains a massive skills shortage post-Brexit and this has caused higher labour costs.”
It is against this backdrop that the April 2026 changes arrive.
How business rates change for hospitality in April 2026
From April 2026, the temporary Retail, Hospitality and Leisure business rates relief comes to an end. Local authority guidance for 2026/27 confirms that the relief will not be extended.
At the same time, a new business rates revaluation takes effect, based on more recent property values. Government policy papers on business rates reform explain that a new, permanently lower multiplier will apply to qualifying retail, hospitality and leisure properties, replacing the temporary relief with a structural change to the system.
For some operators, the lower multiplier will help. For others, particularly where rateable values have risen sharply, the end of relief and the revaluation may still result in higher bills. This is what happened in the pub sector, which led to the Government announcing a 15% business rates relief for pubs.
Antony points out that:
“The disparity in business rates for the sector is large. It contributes some 2.5% of economic output yet pays 11% of the business rates bill.”
April 2026 National Living Wage increases for hospitality
From April 2026, the National Living Wage and National Minimum Wage rates increase again. The official rates are set out in the Government’s minimum wage guidance. Hospitality is one of the sectors most exposed to these changes because of its high proportion of lower‑paid and hourly staff.
Higher employer NICs and their impact on hospitality
Employer National Insurance contributions have also risen in recent Budgets, and thresholds have been adjusted so that contributions are due on more of the wage bill. The detailed rates and thresholds for 2025/26 are published on GOV.UK. For labour‑intensive businesses, the combined effect of higher wages and higher employer NICs is a material increase in payroll costs.
In terms of our recent experience, we have just been instructed to Liquidate two restaurants in London’s West End. One traded for over 40 years. The freeholder decided that a bigger opportunity existed in redeveloping the space and so terminated the lease. Some 30 redundancies ensued and the loss of an iconic restaurant in theatre land. So, not only did the business suffer for the reasons mentioned above, ultimately the final nail in the coffin was the decision by the freeholder to terminate the lease.
Why hospitality cost increases hit harder than many other sectors
Hospitality businesses are both labour intensive and property based. That combination means that changes to wage rates, employer NICs and business rates all hit at once.
In its response to the Autumn Budget 2025 UKHospitality highlighted the scale of rateable value increases for accommodation, pubs, restaurants and cafés following the latest revaluation. It warned that, for many operators, rising rateable values, wage increases and other cost pressures risked wiping out much of the benefit of the new, lower business rates multiplier.
Kate Nicholls has repeatedly stressed that bricks‑and‑mortar hospitality businesses are carrying a disproportionate tax burden compared with online‑only operators, and that the sector is at risk of being “taxed out” of high streets and town centres. While she has welcomed structural reform of business rates in principle, she has also been clear that this does not, on its own, offset the wider cost pressures facing the sector.
What hospitality operators are likely to notice first from April 2026
The April 2026 changes will not affect every business in the same way, but common pressure points are likely to include:
- Higher payroll costs as new wage rates and employer NICs take effect
- Higher rates bills where rateable values have increased and relief has ended
- Reduced headroom in cashflow, particularly in quieter trading periods
- Difficulty maintaining repayment plans agreed during and after the pandemic
- Increased pressure from HMRC, landlords and key suppliers
For businesses already operating on thin margins, these pressures can build quickly and may show up first as persistent arrears or a growing reliance on short‑term borrowing.
How insolvency practitioners support hospitality businesses
Insolvency practitioners can help to support hospitality businesses well before any formal insolvency procedure is required. Early advice gives operators more options and a better chance of stabilising the business.
Typical areas of support include:
- Reviewing cashflow and modelling the impact of the April 2026 changes on affordability
- Developing a realistic financial forecast
- Helping to prioritise payments and manage creditor expectations
- Negotiating Time to Pay arrangements with HMRC where tax arrears have built up
- Working with landlords and suppliers to agree revised terms or payment plans
- Considering restructuring options such as a Company Voluntary Arrangement to deal with unmanageable lease or debt commitments
- Exploring refinancing or informal creditor agreements where appropriate
If insolvency cannot be avoided, formal options include Administration, a Creditors’ Voluntary Liquidation or a sale of the business or assets.
The right approach depends on the specific circumstances of each business, including its underlying viability, asset base and creditor position.
With April 2026 approaching, hospitality operators face another round of structural hospitality cost increases. Early financial planning and timely professional advice remain the most effective ways to protect cashflow, manage creditor pressure and preserve viable businesses.
