The 2026 business rates revaluation has triggered warnings from manufacturing representatives about potential cost increases for industrial operators across the UK. The triennial revaluation—the first since 2023—comes as the sector navigates post-pandemic recovery and broader fiscal changes under the current government.

Manufacturing businesses, particularly those operating large factory and warehouse spaces, are examining what the revaluation means for their bottom line. This article examines the revaluation process, industry concerns, and what manufacturers should do now.

Understanding the 2026 Business Rates Revaluation

Business rates are set by local authorities and are based on the rateable value of a property—determined by the Valuation Office Agency (VOA). Under the current statutory framework established in 2017, revaluations occur every three years rather than annually. This means the 2026 revaluation reflects property valuations as they stood on 1 April 2025.

The rateable value is multiplied by the multiplier (uniform business rate) set by the Treasury, which was frozen at 49.9p per pound of rateable value from 2022 onwards as part of pandemic-relief measures. However, from April 2025, the multiplier increased to account for inflation, affecting the total bill even if rateable values remained static.

Manufacturing facilities—warehouses, factories, distribution centres—are particularly exposed because their rateable values reflect industrial property markets, which have shifted since the 2023 assessment. Rising property costs and supply chain consolidation have pushed industrial real estate values upward across the UK, from the South East through the Midlands to Northern industrial clusters.

Industry Concerns and MakeUK Response

MakeUK, the manufacturing trade body representing over 2,000 businesses, has raised concerns about the revaluation's impact on the sector. Manufacturing businesses have cited worries about cost pressures coinciding with other operational challenges, including energy costs and labour market tightness.

The manufacturing sector accounts for roughly 7% of UK GDP and employs over 2.2 million people. However, the industry operates on relatively tight margins compared to other sectors. An analysis by the MakeUK website has emphasised that manufacturers depend on stable, predictable operating costs to remain competitive internationally and to justify continued UK-based investment.

Key concerns raised by industry representatives include:

• Differential impact on large facilities: Manufacturers with substantial factory and warehouse footprints face proportionally larger bills if rateable values rise, whereas smaller operators may see more modest increases.
• International competitiveness: Rising fixed costs may push investment decisions toward lower-cost jurisdictions, particularly in Europe where manufacturers compete directly.
• Timing of pressure: The revaluation coincides with broader fiscal consolidation, adding to business uncertainty.
• Uncertainty ahead of negotiations: Manufacturers want clarity on potential reliefs, phasing, or government support before bills are finalised.

What the Revaluation Means in Practice

To illustrate the mechanics: a factory with a rateable value of £500,000 under the 2023 assessment might be revalued at £540,000 in 2026 if industrial property values have risen 8%. At the current multiplier of around 50p per pound, the annual bill would rise from £250,000 to £270,000—an increase of £20,000 per year, or £60,000 over the three-year period.

For micro or small manufacturers (fewer than 50 employees), small business rate relief can reduce bills by up to 100% for the smallest ratepayers, or by 50% in areas designated as having empty properties. However, relief eligibility depends on turnover and property value thresholds, and growth can push a manufacturer out of relief eligibility unexpectedly.

For larger manufacturers, there is no blanket relief based on sector or size. Some access transition relief if increases exceed a percentage threshold (typically 5-10% per year depending on band), but this phases out over time.

Broader Policy Context and Fiscal Pressures

Business rates remain a devolved issue in Scotland, Wales, and Northern Ireland, with different revaluation cycles and multiplier policies. In England, the Treasury sets the multiplier, and recent years have seen it frozen then partially increased to manage pandemic recovery. However, the structural challenge remains: business rates revenue must fund local authority services, creating pressure for rates to rise as property values climb.

The government has signalled commitment to business rate reform, but comprehensive changes take time. In the interim, individual revaluations proceed mechanically based on VOA assessments. Manufacturers can appeal rateable values if they believe the VOA's valuation is incorrect—a process involving submitting evidence of comparable rents or sales to the VOA, though appeals can take months to resolve.

What Manufacturers Should Do Now

1. Check your 2026 rateable value notice: The VOA issues draft assessments and revaluation notices. Review yours carefully for factual errors (property description, size, features). Small errors can compound into significant bill differences.

2. Gather comparable evidence: If your rateable value seems high, document comparable industrial properties in your area with recent lettings or sales. This forms the basis of an appeal under the 2017 Valuation Tribunal for England (or equivalent bodies in other nations).

3. Plan for cash flow: If a revaluation increase is likely, model the impact on three-year cash flow and factor it into budgets alongside other cost pressures.

4. Explore reliefs: Review whether you qualify for small business relief, empty property relief, or other local discretionary schemes. Some councils offer targeted support to manufacturing; contact your local authority's business rates team.

5. Engage with representative bodies: MakeUK, chambers of commerce, and sector-specific federations lobby for manufacturing interests and can advise on emerging policy changes or relief schemes.

6. Consider energy efficiency: Buildings with higher EPC (Energy Performance Certificate) ratings may attract lower rateable values over time. Investing in insulation or renewable energy can have indirect rates benefits.

Forward-Looking Analysis: Will Reform Arrive?

Business rate revaluation remains a recurring flashpoint for manufacturers and other commercial operators. The sector has long advocated for fundamental reform—such as a more frequent revaluation cycle (annual), a shift toward consumption-based taxes, or sectoral relief for manufacturing.

However, large-scale reform is constrained by the fact that business rates generate approximately £31 billion annually for English local authorities. Radical change risks either shifting burden elsewhere (likely to general taxation) or starving councils of revenue. As a result, revaluations continue under the existing framework, and manufacturers must navigate them case-by-case.

The 2026 revaluation will likely reveal divergence across regions. Industrial hubs in the Midlands, Yorkshire, and the North West may see steeper valuations than a decade ago as firms consolidate distribution networks and nearshoring policies from Asia boost demand for UK warehouse space. Meanwhile, some older industrial areas may see modest changes if local property markets have stalled.

Over the next three years, watch for:

• Government statements on business rates reform (pledges often surface during spending reviews or policy consultations).
• Expansion of discretionary reliefs by local councils targeting manufacturing or regional development.
• Further shifts in the commercial property market driven by e-commerce, nearshoring, and automation, which will affect 2029 revaluation baselines.
• Industry lobbying from MakeUK, the CBI, and smaller trade bodies, which may influence policy timing.

For now, manufacturers should treat the 2026 revaluation as a fixed cost pressure to be managed through appeals, relief applications, and operational planning rather than something likely to be reversed in the short term.

Key Takeaways

The 2026 business rates revaluation is a scheduled, technical process that will increase bills for many manufacturers, particularly those with large industrial footprints. While the sector has raised concerns about cost pressures and competitiveness, the revaluation itself is not a new policy change but the result of statutory three-yearly assessments.

Manufacturers should:

• Review draft rateable values closely and appeal if evidence supports a lower assessment.
• Model cash-flow impact and plan budgets accordingly.
• Ensure they claim all available reliefs.
• Engage with trade bodies and local authorities to understand emerging support schemes.

Broader reform remains uncertain, but the revaluation cycle itself is entrenched in law and will continue unless Parliament acts. For now, due diligence and strategic engagement are the best tools operators have to manage this recurring cost pressure.