UK hospitality sector faces further regulatory changes in 2025

The hospitality sector faced both changes and threatened changes during 2024, coupled with a challenging economic climate. These challenges are expected to continue across the coming 12 months.

The impact of the recent UK Budget will be felt by businesses across the sector – for instance, changes to business rates relief, the rise in employer national insurance contributions and the living wage.

Martyn’s Law

The Terrorism (Protection of Premises) Bill – ‘Martyn’s Law’ – would, if enacted in its current form, impose new statutory duties on operators of sports stadia, concert venues, places of worship, hospitals, universities and other public premises where people congregate to assess and address the risk of terrorist attacks. The legislation aims to allow premises to prepare for threats and protect the public.

Differing requirements are imposed depending on whether the premises fall within the definition of ‘standard’ tier - 200 or more individuals present but under 800 - or are ‘enhanced’ tier premises - events with a capacity of more than 800 individuals - or “qualifying public events”.

This law would require businesses and events operators to carry out enhanced health and safety risk assessments along with additional training tailored to the business. Despite reassurance from authorities that Martyn’s Law has been designed to make compliance simple, there remains a concern that this may be a fairly onerous process.

The legislation could affect as many as 650,000 businesses in the UK, although the scope will look different dependent on the size of the business or event. It has been a challenge to ensure the proportionality of measures across a spectrum of different business types and sizes, whilst recognising that the size of the venue may not be the determining factor for the likelihood of a terror attack.

The Bill – which was proposed under the previous UK government - has cross party support and is expected to become law following parliamentary scrutiny. 

Minimum unit pricing

Last year saw an increase in the minimum unit price of alcohol (MUP) in Scotland. The minimum price per unit of alcohol sold increased from 50p to 65p from 30 September 2024. Wales also has MUP legislation, introduced in March 2020, setting the price at 50p per unit. However, this unit price may increase in future subject to the findings of a review into the efficacy of the policy.

There have also been calls for MUP in Northern Ireland. The health minister, Mike Nesbitt, is seeking the backing of his executive colleagues to bring MUP legislation to the Assembly and draft legislation is being prepared. Nesbitt will work with Stormont’s Health Committee to determine where to fix any minimum price.

These developments have resulted in growing pressure on the UK government to implement similar measures in England. This pressure has the potential to result in additional regulation for hospitality and retail businesses in the coming months or years.

Age Verification and Digital ID

Subject to passage of the Data Use and Access Bill, the UK government is proposing to update the Licensing Act 2003 – applicable in England and Wales – to enable individuals to purchase alcohol in pubs, supermarkets and other licensed premises with digital ID. 

The proposal is intended to give people a voluntary, safe and secure way to prove their age without carrying physical documents. The government has also suggested that digital IDs may help reduce waiting times at bars and automated checkouts, helping to drive economic growth. However, there is currently no indication that these changes will be replicated in Scotland or Northern Ireland, which may create a two-tier system for businesses that operate across the UK. 

Pubs codes

The Pubs Code is a set of mandatory regulations in England and Wales setting out rules and procedures in a bid to ensure pub tenants who are under contract to sell products provided by their landlord (‘tied’ tenants) are not worse off than if they were free to serve what they choose (‘free-of-tie’ tenants). The code came into force on 21 July 2016 and applies to all businesses owning 500 or more tied pubs in England and Wales. Whilst the code was developed due to concerns that tied tenants were being unfairly treated by their landlords, some industry figures have criticised the code, arguing far more tenants would be going free-of-tie if the code gave them sufficient bargaining power and rights to do so.

The Scottish Pubs Code, expected to come into effect on a phased basis on 31 March and 30 June 2025, broadly follows the England and Wales Code. However, in Scotland the regulations apply more broadly to all “pub-owning businesses” and may offer more flexibility in respect of when a tenant can request a Market Rent Only option.  Additionally, the pub-owning business must offer to enter into a small-brewer guest beer arrangement at the tenant’s request – and there have been calls in Westminster  to start the consultation process on whether a similar guest beer provision could be added to the Pubs Code in England and Wales.

Alcohol promotions and advertising 

In addition to existing regulation around alcohol promotions in Scotland, the Scottish government has commissioned Public Health Scotland to conduct a review of the evidence on the range of options to reduce exposure to alcohol marketing.  This is to help ensure any decisions taken are informed by evidence and balanced against the impact on the wider economy. Subject to the findings of the review, the Scottish government will determine whether a further consultation is required on proposals to restrict alcohol marketing.

In the low and no alcohol space, retailers and manufacturers are getting to grips with new rules launched by the Advertising Standards Agency in May last year - these will apply to ads that specifically show alcohol-free drinks as alternatives to alcohol

Deposit Return Scheme 

The Deposit Return Scheme (DRS) for drinks containers is a joint initiative by the UK government, the Department of Agriculture, Environment and Rural Affairs (DAERA) in Northern Ireland, the Scottish government, and the Welsh government. The scheme aims to significantly increase recycling rates for single-use drinks containers, reduce littering, and support a circular economy and is intended for roll out in October 2027 - though retailers are calling for the government to rethink that timeframe.

Wales, however, recently decided not to align with the UK-wide approach and has announced a delayed introduction of its own deposit return scheme. Wales decided not to join after the Labour UK government excluded glass from the UK-wide scheme, maintaining the position adopted by the previous Conservative government. The decision to exclude glass - which was originally due to concerns it would create undue complexity for the drinks industry in respect of storage and handling costs – has sparked criticism from environmental campaigners and opposition MPs.  

Although meant to help with recycling and reduce littering, there remains controversy over the costs of the scheme to retailers. As the DRS is largely self-financing, there are concerns over the timeframe in which businesses must register with the scheme and the potential impact on small businesses and producers.

However, there has already been a significant change for the sector confirming that hospitality venues will no longer legally be required to act as a return point. Instead, venues can voluntarily host a return point and may come under pressure to do so from an environmental perspective. The Deposit Management Organisation, which will oversee running the scheme, is expected to be in place in spring 2025, at which point further detail will become available including the process for exemptions and the deposit level.

Single use cups

In Scotland, there was a consultation in August 2024 on the introduction of a 25p charge to all single-use drinks cups when a drink is bought, regardless of the material of the cup. This is envisaged to take effect before the end of 2025 and, under the current plans, suppliers would be required to apply the charge at the point of sale when consumers are purchasing a drink.

The 25p charge is intended to reduce the use of single-use disposable beverage cups by facilitating a behaviour change whereby consumers consider bringing their own reusable cups to avoid the charge. The implementation of the charge would be similar to the approach taken for single-use carrier bags, which saw an 80% reduction in the use of plastic carrier bags in the first year.

Although the charge on single use cups is intended to address the ‘throw-away culture’ within society, there would be additional increased record-keeping duties for drinks retailers. Drinks retailers would be expected to record the numbers of single-use disposable beverage cups they have charged for, the charge paid for them, the amount they are entitled to deduct to calculate the new proceeds, and the new proceeds raised by the charge – all of which would create additional administrative burdens on businesses.

Separately, in Belfast, a number of entertainment venues are piloting a scheme to remove the use of plastic cups at gigs and events in 2025. The 12-month pilot is being driven by the Venue Sustainability Forum and is supported by Visit Belfast and several other organisations. The SSE Arena will be the first participating venue to implement the use of reusable cups from this month.

Tourism and tourist taxes

There are industry concerns that the new Electronic Travel Authorisation (ETA) scheme, which came into effect on 8 January 2025, will have a significant impact on Northern Ireland’s tourist economy. All non-European travellers must now have an ETA costing £10 per person for entry into any part of the UK. It will be required for European travellers from April. UK and Irish citizens, and permanent Irish residents, will not require an ETA.

According to statistics from the Department for the Economy, 67% of Northern Ireland’s overseas travellers arrive via the Republic. The economy minister, Conor Murphy, considers that seamless all-island travel is the key to building growth in the tourism sector, and would like to see some amendments to the scheme. For example, Murphy has proposed that an exemption for travel into Northern Ireland for up to seven days would assist, and cited a temporary UK-wide exemption for EU school groups as an example of how the rules may be amended.

Elsewhere we are seeing developments in respect of tourist accommodation taxes. The Scottish Parliament passed the Visitor Levy (Scotland) Act 2024 last year. Scottish local authorities now have the power to introduce a tourist tax, though any decision to do so must include an 18-month implementation period.

Councillors in Edinburgh have voted for the introduction of a tourist tax aimed at raising up to £50 million a year. Edinburgh would become the first city in Scotland to charge a transient visitor levy on stays, with profits being used to fund improvements to the capital. The charge would cover hotels, B&Bs, self-catering accommodation and rooms and properties let through websites such as AirBnB.  If agreed, this scheme will start on 24 July 2026, with bookings made from 1 May 2026 being subject to a 5% plus VAT surcharge. 

Aside from an increased administrative burden on accommodation providers, there are also industry concerns that any potential increased charges to guests to cover the cost of the tax could push businesses over the VAT threshold.

A £1.25 per person per night tourism tax (75p for hostels and campsites) could be introduced in Wales from 2027 if legislation published in November 2024 is passed by the Welsh parliament. Elsewhere in the UK there is no power to introduce a “tourist tax” as yet - primary legislation would be required - but various places, notably Manchester and certain seaside resorts in Dorset, have introduced a form of tourism levy by way of a legal workaround by taxing accommodation through Business Improvement Districts.

It remains to be seen whether these additional charges could have a knock-on effect on the wider retail industry in areas which are reliant on tourist trade.

Low Emissions Zones

Low Emission Zones (LEZs) were first introduced in London in 2008, with the Ultra Low Emission Zone (ULEZ) introduced in April 2019. In recent years there has been an expansion of LEZs across the UK, bringing the total to eight cities in England and four in Scotland. The terms of these LEZ schemes vary across the different cities.  Concerns have been expressed by those in the retail and hospitality sectors that these restrictions could adversely impact city centre footfall levels. There have been unsuccessful legal challenges to some of the schemes in the past - the appetite for litigation could be reignited as and when there are expansions sought to the terms of the schemes, if there is an intention to roll out to new cities or in the context of challenging a penalty issued under an existing scheme.

Co-written by Corey McCulloch and Hannah Burton of Pinsent Masons.