Henderson Loggie leads calls for tax and regulatory overhaul to support Scotland’s vital food and drink sector

Scottish accountancy firm Henderson Loggie is warning the country’s food and drink sector could face critical challenges if urgent action isn’t taken to address outdated tax policies impacting the industry.

Scotland's food and drink businesses have shown remarkable resilience over the past few years, driven in-part by a rapid growth in the number of independently owned producers, retailers and hospitality venues across the country. The food and drink supply chain is one of Scotland’s largest employers and contributes more than £19 billion in economic value, according to the latest figures from industry body Scotland Food & Drink. But there are growing calls for radical reform of regulation and taxation with founders and business leaders warning the sector is facing a potential cliff edge due to complex taxation policy, increased rates, rising employment costs, inflation, energy prices and ongoing recruitment challenges.

Data from Savills shows 38 hospitality openings in Glasgow city centre during 2025, indicating continued demand for prime hospitality locations despite significant trading pressures, but estimates suggest operating profit margins in the industry could now be as low as three percent, with many new business owners warning expansion or continued growth is now impossible.

Henderson Loggie’s Head of Food and Drink in Scotland, Matthew McDermott, is leading calls for targeted long-term action for the industry, including a review of the recent increase in employer’s National Insurance Contributions and a permanent cut in VAT. Scotland’s food and drink industry also faces some of the highest VAT burdens in Europe. In Ireland, restaurant and catering services pay 9 percent, while in Germany, it’s 7 percent and the majority of food and drink related hospitality businesses in France, Italy and Spain pay 10 percent.

The recent announcement from the Prime Minister, Andy Burnham, that pubs, clubs and live music venues would benefit from a 20 percent cut in business rates from April next year has been broadly welcomed by the industry, but leaders are calling for much deeper action and – with no confirmation from Holyrood yet - there remains uncertainty over whether venues in Scotland will see any of the planned benefits.

Matthew McDermott commented:

“Given the recent growth within parts of the food and drink sector, it could be tempting to be complacent and hope for the best, but the industry is facing challenges that could genuinely put a hard brake on its long-term sustainable, successful future. Producers and exporters are continuously faced with increased regulatory burdens and spiraling cost pressures, not helped by the current geopolitical turmoil and endless inflationary pressures. For the hospitality sector, the pressures are largely homegrown with increasing costs and regulatory burdens chipping away at already slim profits.”

“When you read about the myriad of challenges facing the industry, it’s hard to imagine who would decide to enter and lead such a difficult sector, but that’s exactly why we need to support Scotland’s food and drink producers, exporters and hospitality providers. In some of the toughest of times, they’ve chosen to innovate and expand – providing employment and significant economic output. Food and drink has long been a core part of the Scottish economy and its success or failure will impact everything from tax revenues to employment figures and even the future of our struggling High Streets. Now is the time for politicians to shift gear from promises to policy and help an industry that is at the heart of Scotland’s future success.”

About Henderson Loggie

Henderson Loggie is an independent, owner-managed accountancy firm, based in Scotland since 1909. The business has more than 190 partners and staff and serves clients of all sizes, from self-employed entrepreneurs through to charities, public sector bodies and multinational corporations.

Media Contact Brian O’Neill Director Dear Green Media E: brian@deargreenmedia.com T: 07903487476