Navigating the 2025 EII Exemption Update: What UK Manufacturers Need to Know

On 16 April 2025, the Energy Intensive Industries (EII) exemption scheme was updated to reflect the current “baseline electricity price,” which decreased from £204.37/MWh in 2024 to £190.51/MWh in 2025. Although this is a small change year on year, it has increased dramatically from the 2023 price of £166.84/MWh.

Luke Gott, Senior Consultant, R&D Tax Analysis at Ryan, explains what the EII exemption scheme is and how the recent update will impact energy-intensive industries and the financial relief available.

What Is the Energy Intensive Industries (EII) Exemption Scheme?

The Energy Intensive Industries (EII) exemption scheme helps high-energy-consuming businesses by reducing their financial burden from taxes funding renewable energy initiatives, thereby lowering their energy costs. This support ensures these industries remain competitive and can continue operating effectively while contributing to the UK’s net-zero strategy. 

The EII exemption scheme is available to applicants manufacturing in energy-intensive industries who pass an eligibility calculation called the business level test (BLT). Here, you must show that your electricity spend equates to 20% or more of your gross value added (GVA).  

Read more about Energy Tax Relief and how schemes such as EII and Climate Change Levy (CCL) help energy-intensive industries in the UK to alleviate the financial burden associated with high-energy consumption.

What Is the “Baseline Electricity Price,” and Why Does It Matter? 

The baseline (or reference) electricity price is a crucial component of the business-level test. This calculation qualifies applicants for the EII scheme, as you cannot claim without passing this test. 

The calculation is simple: Electricity spend / EBITDA + staff costs. Electricity spend equals an applicant’s electricity consumption multiplied by the reference price. 

What Are the Impacts of the EII Exemption Scheme Update?

Since the baseline electricity price has changed slightly for the worse, it affects every future calculation. There are no impacts on claims submitted to the department of business and trade prior to this update. 

Here’s a summary of the impacts on future and previous applicants who fail, or have failed, the test:

• Future applicants who pass the BLT significantly: no material effect.
• Future applicants who marginally pass the BLT (~20%): they may now fail, as the reference price has decreased slightly.
• Previous applicants who failed the BLT before April 2024 by a few % points: they should reassess as they are more likely to qualify now, especially if they were close to the 20% intensity figure.

Please note that if an applicant (with three sets or more of published accounts) passes the business level test (BLT) and receives the exemptions under the EII scheme, their eligibility must only be reviewed again when they make the application for their sixth certificate. Meaning, if they pass the BLT first time, they don’t have to pass it again for five more years.  

Maximise Your Claim Value with Ryan

In this constantly evolving landscape, expert advice is more valuable than ever. By partnering with Ryan’s informed consultants, you can ensure that any new rules are applied to you correctly, whilst your claim value is maximised and is able to withstand any scrutiny from HMRC.

Speak to our expert Energy Tax team today to identify which energy schemes you may qualify for and to determine if you are impacted by the recent EII update. If you applied to the EII scheme more than two years ago, you should reassess your eligibility with our team as soon as possible, as you may now qualify.