Manufacturers face £1 billion business rates shock – Make UK analysis

07.04.2026

Britain’s manufacturers are facing a sharp rise in costs this April, with new analysis from Make UK showing the sector could see business rates increase by almost £1 billion annually. 

The increase comes at a time when companies are already contending with higher energy bills and rising employment costs, creating a significant financial “triple whammy”.

Rising costs hit at a critical moment

The findings are based on Make UK analysis of official data on changes to Rateable Values (RVs) for manufacturing businesses between 2023 and 2026. As a result, the sector is expected to pay an additional £939 million per year in business rates from April.

For many firms, these increases coincide with the renegotiation of energy contracts and the introduction of additional employment costs, compounding financial pressures across the sector.

Two in three manufacturers report RV increases of up to 20%. However, a significant proportion are facing much steeper rises: 17% report increases between 20% and 50%, while 3% have seen hikes of between 50% and 100%.

A major and growing cost burden

Business rates are already one of the largest fixed costs for manufacturers. According to Make UK’s survey of 132 companies, conducted between 28 January and 19 February, nearly a quarter (23%) say rates are their second largest cost, while 8% identify them as their single biggest expense.

As a non-performance-related cost, business rates directly influence decisions on investment, hiring and innovation. With rising bills, many manufacturers are now considering reducing headcount, with modelling suggesting up to 25,000 jobs could be at risk.

Structural challenges in the current system

Make UK argues that the existing business rates system disproportionately impacts manufacturers. Because rates are based on property size, firms can be treated as “large” for taxation purposes despite being SMEs in terms of turnover and employment.

Although manufacturing represents less than 10% of the UK economy, it accounts for more than a fifth (21%) of total rateable property values. The system can also discourage investment in facilities and sustainability, as improvements such as renewable energy installations can increase a site’s value - and therefore its tax burden.

More than half (55%) of manufacturing properties have RVs exceeding £100,000, while one in five are valued above £500,000. This means many firms will be affected by the higher “high value” multiplier. In contrast, only 6% of manufacturers have RVs below £20,000, limiting access to relief schemes such as Small Business Rates Relief.

Industry calls for reform

In response, Make UK is urging the Government to reform the business rates system to better reflect the realities of modern manufacturing. Key recommendations include:

• A more proportional model: Explore alternative approaches that link business rates to company size, sector or performance, such as turnover-based models or reduced multipliers for SMEs
• Greater certainty for businesses: Provide at least 12 months’ notice before new rates take effect, supported by more generous transitional relief in the first year
• Improved transparency: Require local authorities to publish impact reports showing how business rates are used to support local communities

Make UK warns that without reform, rising business rates risk undermining investment, competitiveness and employment in one of the UK’s key strategic sectors at a particularly challenging time.