Tax experts are warning the government has ‘no coherent strategy’ over their move to cut electricity bills

The Government’s welcome move to slash electricity bills for over 7,000 UK businesses has been branded “strategically incoherent” by tax experts — with new tax burdens estimated to cost £685 million quietly being placed on the very same firms under the guise of business rates reform.

According to global tax and software firm Ryan, around 4,300 very large industrial properties in England, those with rateable values above £500,000, will be hit with a new business rates ‘levy’ from April 2026 to fund continued tax breaks for high street retail, leisure and hospitality (RHL) sectors.

Based on the 2023 local rating lists, those properties carry a collective rateable value of £5.64 billion which Ryan say could rocket by more than 20% under next year’s revaluation. A 10p supplement on the standard multiplier — the maximum proposed under new legislation — could generate a staggering £685 million in additional annual costs for major industrial occupiers.

Alex Probyn, Practice Leader of Property Tax (Europe and Asia-Pacific) at Ryan, said that the intervention to lower industrial energy costs for electricity-intensive businesses in manufacturing sectors like automotive, aerospace and chemicals was welcome but added, “it’s perverse to then ask those very same businesses to foot the bill for high street tax cuts through higher business rates from 2026, a year before the energy support will come into effect. 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.”

While Ministers have rightly acknowledged that industrial electricity prices are undermining competitiveness — with UK manufacturers paying £258/MWh on average in 2023 compared to £178 in France and £177 in Germany — business leaders argue that any benefit from lower energy bills risks being undermined by increased property taxation.

The new Non-Domestic Rating (Multipliers and Private Schools) Act 2024, which received Royal Assent in April, allows for the introduction of an RHL-specific multiplier, up to 20p lower than the standard rate, effectively embedding permanent tax relief for parts of the high street. The cost of this policy will be funded by just 1% of ratepayers — more than 16,000 businesses occupying larger commercial properties including industrial premises.

UK businesses already face the highest property taxes in the developed world, with a property tax-to-GDP ratio of 4.1% — more than double the EU average.

Probyn added, “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 in order to subsidise other sectors. There is no coherent strategy; it’s a contradiction.”