Budget 2026 business rates: what changes, and what does not, for Sheffield's industrial and manufacturing premises

Most of the business rates headlines from Budget 2026 were about pubs, restaurants and shops. If you run an engineering firm in the Lower Don Valley, a fabrication shop in Attercliffe or a distribution unit near the M1, the honest answer is that very little of that relief is aimed at you. This piece sets out what the Budget does and does not change for industrial, manufacturing and other non-retail premises in Sheffield, what it means for running costs, and how that feeds into a commercial mortgage application.

The big reliefs are for retail, hospitality and leisure

Three of the Budget's main business rates measures are limited to retail, hospitality and leisure (RHL) properties in England:

• Small Business Rates Relief. The threshold for 100% relief rises to a rateable value of £18,000 and the tapered threshold to £21,000 from 1 April 2027, but only for qualifying RHL properties (para 6.190). The previous thresholds were £12,000 and £15,000.
• A real-terms freeze. Bill increases for qualifying RHL properties are "capped by CPI inflation in 2027-28 and 2028-29" (para 6.191).
• Pubs and live music venues. Relief rises "from 15% to 35% from 1 April 2027" for pubs, social clubs and most live music venues (para 6.189).

The Budget does not change Small Business Rates Relief thresholds for offices, workshops, factories or warehouses. So a small manufacturer with a rateable value of £16,000 will not suddenly fall out of rates the way a café with the same rateable value might. If your premises are industrial, do not build any of these reliefs into your forecasts.

Measures that do reach industrial and manufacturing occupiers

The 1p Transitional Relief Supplement continues for two more years

The measure most likely to touch a Sheffield industrial ratepayer is the Transitional Relief Supplement. The Budget is "extending the 1p TRS for two years from 1 April 2027. This will be paid each year by those seeing bill increases otherwise below the Transitional Relief and SSB caps" (para 6.193).

Put simply, if your bill fell or only rose modestly when the 2026 rating list came in, you keep paying a 1p supplement for two more years. The Treasury says it "only affects properties that have seen smaller increases or reductions in their business rates bills and will help fund the two-year real-terms freeze" (para 3.24). In other words, part of the cost of the retail and hospitality freeze is met by ratepayers like many industrial occupiers.

Illustrative example: a precision engineering company occupies a unit with a rateable value of £60,000. Its bill went down slightly at the 2026 revaluation. If the supplement works as an extra 1p for each pound of rateable value, it adds about £600 a year, or roughly £1,200 over the two years from April 2027. That is not a large sum for most firms, but it is a cost that does not go away just because the headline announcements were about relief. Check the exact figure on your own bill rather than relying on this example.

Supporting Small Business extended for one year

Some smaller ratepayers who lost Small Business Rates Relief at a revaluation are protected by the Supporting Small Business scheme. The Budget extends the 2026 scheme "to those who were in receipt of 2023 SSB, for one year from 1 April 2027 in England" (para 6.192). The Treasury says "around 37,000 small and independent ratepayers will continue to receive protection next year worth an average of £3,000" (para 3.22).

This scheme is not limited to retail. If your workshop or small industrial unit was on the 2023 scheme, check whether you qualify for the extension. If you are buying a different unit, remember that protection usually relates to a particular ratepayer and property, so do not assume it moves with you.

Appeals become cheaper

The Budget abolishes "the £150 and £300 fees charged by the Valuation Tribunal in England for non-domestic rating appeals" (para 6.194). This applies to the 2026 list and future lists, and fees already paid for appeals on the 2026 list can be refunded. For an industrial occupier who thinks the 2026 rateable value is too high, the cost of taking a case to the tribunal has fallen. Any reduction in rateable value reduces running costs for the rest of the list.

Empty property and avoidance

The Budget says the government will "engage with businesses and local government ... to understand how the system can better incentivise the reoccupation of empty properties" (para 3.25). No new empty property relief is announced. It also confirms work on a General Anti-Avoidance Rule for business rates, following consultation (para 6.196). For owners of vacant industrial stock in Sheffield, that is something to watch, not something to plan around yet.

What the Budget does not tell you

The document gives no figures for the 2027-28 business rates multipliers and no large-property multiplier or surcharge rates. It does not change the general revaluation timetable beyond referring to "the 2026 rating list" and "the 2029 revaluation". So you cannot work out your 2027-28 bill from the Budget alone. Wait for your billing authority's demand notice, and use your current bill plus an allowance for inflation as a working assumption.

South Yorkshire is also not in the first wave of Business Rates Retention Zones, which names Greater Manchester, the East Midlands, Hull and East Yorkshire, the Liverpool City Region, Tees Valley, the West of England, the North East, York and North Yorkshire and the Greater London Authority (para 4.61). That affects how local authorities fund development, not what an individual ratepayer pays. Locally, the Budget does provide £3 million to match fund specialist innovation space for early-stage companies in the Don Valley Corridor (para 6.53).

Running costs beyond rates

For manufacturers, energy may matter more than rates. From April 2027 the British Industrial Competitiveness Scheme will support "over 10,000 eligible manufacturers in Great Britain, cutting their electricity bills by up to 25%" (para 4.24), and applications are open now (para 6.31). The Budget also freezes the main rate of Climate Change Levy on electricity from 1 April 2028 (para 4.25). If your business uses a lot of power, checking your eligibility is likely to be worth more than any rates measure in the Budget.

Wages move the other way. The National Living Wage rises by 3.9% to £13.21 an hour from 1 April 2027 (para 6.128).

How this feeds into borrowing

When a lender looks at an owner-occupier commercial mortgage, it tests whether the business's trading profit comfortably covers the loan repayments. Business rates, energy and wages all sit above that line. A lender will usually ask for recent accounts and management figures, and a good application explains any known cost changes rather than leaving the underwriter to find them.

For a Sheffield industrial business, the practical effect of Budget 2026 is likely to be small on rates, possibly helpful on energy, and negative on wages. Put all three into next year's forecast before you apply. If the numbers still show clear cover after those changes, you are presenting a stronger case.

What to do now

1. Check your rates position. Confirm whether you currently pay the Transitional Relief Supplement or receive Supporting Small Business relief, using your 2026-27 bill.
2. Consider an appeal. If you think your 2026 rateable value is wrong, the removal of tribunal fees makes it cheaper to pursue. Take professional advice first.
3. Apply for BICS if eligible. Check whether your business qualifies for the electricity discount from April 2027.
4. Update your forecast. Include the 1p supplement where it applies, the April 2027 wage rise and any energy saving, then work out your trading profit cover.
5. Don't count on new relief. Industrial premises are outside the RHL measures. If you are buying a unit, budget its running costs on today's rules.

Key dates

• 1 April 2027: TRS extended for two years; SSB extended for one year; National Living Wage rises to £13.21; BICS support begins (paras 6.193, 6.192, 6.128 and 4.24)
• 2027-28 and 2028-29: CPI cap on RHL bills only (para 6.191)
• 1 April 2028: Climate Change Levy main rate on electricity frozen (para 4.25)
• 2029: next revaluation (para 6.189)

Brought to you by Business Mortgages Broker

This article was written by Business Mortgages Broker, which arranges owner-occupier business mortgages for UK trading companies. Founder Matt Lenzie has 25 years in financial services, raising debt and equity, and has arranged around £400m of property finance. If you are a Sheffield business thinking about buying your premises, read the Business Mortgages Broker guide to business mortgages in Sheffield.

Source: HM Treasury, Budget 2026 (HC 726), 28 October 2026. This article is general information, not tax or financial advice.