Author Archives: accounts

The likely direction of interest rates in 2026

As we look ahead to 2026, there is growing speculation about how the Bank of England will manage interest rates during what many economists believe will be a period of calmer inflation, steadier wage growth and a more predictable economic backdrop. After several years shaped by sharp price rises, supply chain shocks and policy responses that required rapid increases to the Bank Rate, the outlook for the coming year appears more settled and this is creating a sense that borrowing costs may edge downwards rather than upwards.

The current Bank Rate stands at around four per cent following a series of cuts through 2024 and 2025 as inflation eased gradually. Policymakers have indicated that they remain alert to any resurgence in inflationary pressure, yet they also recognise that the period of high inflation is now behind us. If this trend continues and inflation drifts closer to the Bank’s long term target, it will give the Monetary Policy Committee more room to make modest reductions during 2026. Many forecasters expect something in the region of a quarter to half a percentage point of cuts during the year, although the timing will depend heavily on the data released each quarter.

For households and businesses, this would create a slightly more comfortable lending environment. Mortgage borrowers on variable deals may feel some relief as repayments fall a little and businesses that rely on flexible credit facilities could find that their financing costs ease. Fixed mortgage rates may also become more attractive if lenders anticipate further gradual reductions. However, the broader economic impact is unlikely to be dramatic, since the Bank is not expected to deliver large or rapid cuts. The emphasis is more likely to remain on steady adjustments that avoid disrupting confidence or encouraging excessive borrowing.

It is worth noting that a full return to the ultra-low interest rate environment seen before the pandemic is not expected. Structural changes in the UK economy, global supply conditions and the government’s fiscal position all point towards a future in which interest rates remain higher than the levels seen in the decade prior to 2020. Even so, a move towards slightly lower borrowing costs in 2026 would be consistent with a maturing recovery and a gradual balancing of supply and demand across the economy.

Overall, the most probable outcome for 2026 is a measured reduction in interest rates that supports economic stability without risking a renewed surge in inflation.

Source:Other | 30-11-2025

Outlook For Food And Energy Prices In The Year Ahead

Food and energy costs remain central concerns for households and businesses because they influence everything from wages to margins to day to day operating decisions. Inflation is easing compared to the volatility of the last few years, but the picture for the next twelve months is still mixed. Prices appear set to rise more slowly, yet neither category is likely to fall in any meaningful way.

Food price outlook

Food prices surged during the supply chain disruptions of 2021 to 2023 and were pushed higher again by wage pressures, transport costs and global shipping instability. Although the pace of increase has slowed during the past year, prices remain high. Many clients still question why food costs have not dropped as headline inflation falls. The reason is that the underlying conditions that drove those increases have not disappeared. Agriculture, food production, and distribution still face labour shortages, higher input costs, and ongoing uncertainty in global trade routes.

The most likely outcome for the coming year is a gradual easing in the rate of food inflation rather than a reduction in prices. Supermarkets report calmer supply chains and producers appear more willing to absorb cost pressures in order to protect sales volumes. Better harvests in some regions and lower freight costs should also help. These factors together should keep the next year more stable than the recent past.

Energy price outlook

Energy prices have been among the most unpredictable elements of the recent inflation cycle. While the extreme spikes have eased, the underlying global influences remain. The UK is particularly exposed because it relies heavily on imported gas and is tied to international pricing. Global gas markets continue to react to geopolitical tensions, shipping disruptions and variations in European storage levels. These variables explain why energy pricing still carries a degree of uncertainty.

However, the direction for next year looks a little steadier.

What this means for business planning

The next year is unlikely to bring substantial falls in food or energy prices, but the environment should feel less pressured. This increased stability provides an opportunity for better budgeting and more confident forecasting. Hospitality businesses and manufacturers may find it easier to plan pricing strategies, menus and supply arrangements. Broader stability also supports decisions on energy efficiency projects since assumptions about future savings appear more reliable.

Source:Other | 30-11-2025

Autumn Budget 2025 – High Value Council Tax Surcharge

Starting in 2028-29, the government will introduce a High Value Council Tax Surcharge (HVCTS) for residential properties in England valued at £2 million or more. This surcharge will be collected by local authorities, but the revenue will go to central government.

High Value Council Tax Surcharge Charging Structure

Property Value

Surcharge

£2 million – £2.5 million

£2,500

£2.5 million – £3.5 million

£3,500

£3.5 million – £5 million

£5,000

Over £5 million

£7,500

The surcharge amounts will be based on the value of the residential property in 2026. The surcharge will increase as the property value rises, up to a maximum charge of £7,500 for properties valued over £5 million.

According to HM Treasury figures, the surcharge will apply to fewer than 1% of properties in England. Homeowners, not tenants, will be liable for the surcharge, which will be in addition to their existing Council Tax. Social housing will be excluded.

Properties above the £2 million threshold will be reassessed every five years by the Valuation Office. The surcharge rates will increase annually in line with CPI inflation starting in 2029-30.

This new charge is expected to raise around £430 million annually for local government services. Local authorities will be compensated for the additional costs of administering the surcharge. A public consultation on further details, including reliefs and exemptions, will take place next year.

Source:HM Treasury | 26-11-2025

Autumn Budget 2025 – Fuel Duty rates

In the Autumn Budget, the Chancellor had been expected to increase fuel duty rates. However, she has extended the fuel duty cut for a further 6 months to help support households and businesses. 

The Chancellor said ‘I know that the cost of travelling to and from work is still too expensive, so I am extending the 5p cut until September 2026. And because I know that changes in wholesale prices are not always passed onto motorists, I am bringing in new rules to mandate petrol forecourts to share real-time prices through a new Fuel Finder.’ 

This means that the temporary cut in the rates of fuel duty introduced at Spring Statement in March 2022, and extended multiple times is to be extended for a further 6 months until 31 August 2026.

The planned inflation-based increase for 2026-27 will be cancelled. Together with the launch of Fuel Finder, these measures are expected to save families £89 next year compared to previous plans.

Source:HM Treasury | 26-11-2025

Autumn Budget 2025 – Alcohol and Tobacco Duty

The Chancellor has confirmed a series of duty increases on tobacco, vaping liquid, and alcohol that will take effect over the next year, with new rates intended to balance public health concerns with support for producers and the wider hospitality sector.

As part of the Autumn Budget measures the Chancellor announced that the duty rates on tobacco products were increased by 2% above the rate of inflation (based on RPI) effective from 6pm on 26 November 2025. The one-off increase of £2.20 per 100 cigarettes or 50g of other tobacco products and annual uprating of tobacco duty by RPI + 2% next year will take effect from 1 October 2026

It was also announced as part of last year’s Budget measures that the government will introduce a new duty at a flat rate excise duty of £2.20 per 10ml on all vaping liquid which will come into effect from 1 October 2026.

The Chancellor also confirmed that effective from 1 February 2026, the government will increase the Alcohol Duty rates in line with Retail Price Index inflation. The Small Producer Relief discounts will also be uprated, so eligible small producers receive relative duty reductions as now. These changes will also take effect from 1 February 2026.

The government considered various views, from cutting or freezing alcohol duties to increasing them above inflation. The decision they announced seeks to balance supporting alcohol producers and the hospitality sector with the need to reduce alcohol related harm.

Source:HM Treasury | 26-11-2025