The UK Autumn Budget 2025 outlines a mixed outlook for cold chain businesses, with limited relief on capital investment and rising costs across fuel, employment, and business rates. While the government introduced a new 40% First-Year Allowance for leased plant and machinery, expectations for full expensing on leased assets were not met. Combined with higher operational costs, this adds financial pressure to the sector.
Business rates reform will introduce a new higher multiplier for properties with a rateable value over £500,000 from April 2026. Many cold storage facilities fall into this category and will face the full 2.8p increase, raising the national rate to 50.8p. Sector estimates suggest this could result in an additional £10–20 million in annual business rates costs. Despite £2.3 billion in transitional relief secured through industry lobbying, cold storage sites remain excluded from long-term exemptions offered to retail, hospitality, and leisure properties.
Fuel duty will remain frozen until August 2026, continuing the 5 pence per litre reduction introduced in 2022. However, the duty will gradually return to pre-2022 levels from September 2026. The phased increase—reaching 5p/litre by March 2027—is expected to cost the sector approximately £135.7 million annually, including £10.7 million for transport refrigeration units and an estimated £125 million for refrigerated HGVs.
Employment costs will continue to rise. Employer National Insurance remains at 15%, with a frozen earnings threshold of £5,000 until 2031. From April 2029, a new £2,000 annual cap on NI-exempt pension contributions under salary sacrifice schemes will also apply. The National Living Wage will increase to £12.62/hour from April 2026, with forecasts indicating a potential rise to £13.15 by 2027. These changes follow an estimated £620 million increase in employment costs already borne by the sector.
Capital investment incentives saw limited improvement. Full expensing remains only for outright purchases, while a new 40% First-Year Allowance will apply to leased equipment starting January 2026. This provides partial relief for investment in technologies such as refrigeration systems, energy management tools, and electric vehicles, but falls short of broader calls for full expensing on leased assets.
The Soft Drinks Industry Levy will be expanded from January 2028 to include milk-based and alternative drinks with added sugar. Products exceeding 4.5g of sugar per 100ml will be subject to the tax, potentially increasing costs or triggering reformulations for items transported via the cold chain.
A Cold Chain Federation survey found that one-third of respondents identified the National Living Wage increase as their top concern, followed by tax changes and business rates. Rising fuel costs also featured prominently.
“The last two budget outcomes have proved challenging for industry and, of course, the cold chain. It is clear that increases in food and pharma inflation will be the unintended consequence of various tax and employment cost rises impacting our sector,” said Phil Pluck, CEO of the Cold Chain Federation. “Reemphasising the criticality of the cold chain will also act as a strong voice for government to fully understand the impact of taxing rather than supporting the sector.”
