Biggest manufacturers expected to pay £685m more in tax
Manufacturers across the UK will have to cough up £685m more in new property taxes next year, new research has suggested, adding costs to several businesses which are struggling to boost output and already cutting back on headcounts.
The government last week said it was ready to address high electricity prices for up to 7,000 firms, with energy bills to be slashed by up to a quarter as part of a move to scrap green levies on firms in the industrial strategy.
But tax advisory firm Ryan has estimated that 4,300 large industrial properties in England will face a new business rates levy costing them around hundreds of millions of pounds more a year.
The government said the new higher rate on the most valuable properties would help smaller firms benefit from tax breaks.
However, Ryan pointed out that manufacturers are set to be the hardest hit by the changes, reflecting “perverse” policies that will see costs soar in 2026 before energy support takes effect in 2027.
Alex Probyn, a property tax expert at Ryan, said: “If the goal is to boost UK competitiveness, we need a coherent strategy that tackles the total burden of fixed costs — not one that gives with one hand and then takes with the other.”
“We’re seeing two opposing policies rolled out simultaneously. One aims to support industry by reducing energy costs.
“The other increases a key fixed operational cost — property tax — on the very same businesses to subsidise other sectors.
“There is no coherent strategy; it’s a contradiction.”
Taxes ‘killing manufacturers’
A government spokesperson said: “We are making it easier and quicker for businesses to invest and grow by cutting British industrial electricity costs with unprecedented new support, which will cut electricity costs by around 20-25% for thousands of businesses.
“Our reform to the business rates system will also create a fairer business rates system that protects the high street, supports investment and levels the playing field.
“A new, permanently lower business rates in 2026 will benefit over 280,000 retail, hospitality and leisure business properties and will be sustainably funded by a new, higher rate on the 1% of most valuable business properties.”
A recent survey by the Confederation of British Industry (CBI) showed that manufacturing output had continued to falter, with production dropping by as much as 23 per cent in the three months to May.
Higher employment taxes and energy bills have been cited as the most damaging costs to businesses, with subsidies providing firms with some support.
One of the government’s strongest critics has been Sir Jim Ratcliffe, the founder of petrochemicals giant Ineos, who said carbon taxes were unaffordable and “killing manufacturing”.
The acetyls arm of Ineos slammed the government for delaying subsidies until 2028 after it switched the fuel source for one of its major plants in Hull to low-carbon hydrogen,
Ineos Acetyls, which is key to production of medicine and synthetic fibres, said it felt the government had not rewarded it for reducing emissions.
“It feels like, instead of fighting our competitors, we’re fighting our government,” Ineos Acetyls chief executive David Brooks said.