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BICS

What are supporting activities for BICS?

BICS applicants can include a portion of their supporting activities when calculating their eligible manufacturing expenditure, but it's banded. Find out how much can be included and how it impacts your energy relief.

Millie Palmer

When you work out your British Industrial Competitiveness Scheme (BICS) exemption, the production line is only part of the picture. A factory also runs on compressed air, ventilation, lighting, IT, quality testing and offices, and BICS recognises that these supporting activities are part of making an eligible product. How you count them can move you from one exemption tier to another.

Why are supporting activities important?

BICS is a banded scheme, which means that the level of relief you get on your electricity bills depends on how much of your energy is used on eligible manufacturing. The bands work as steps, meaning the amount of eligible electricity can mean the difference between having an application or not:

  • 25% or less of electricity used for eligible manufacturing: 0% exemption
  • More than 25% but less than 50%: 50% exemption
  • 50% or more: 100% exemption

The government recognises that eligible manufacturing goes beyond machine usage alone, and some supporting activities are essential to manufacturing. The same bands apply to supporting activities; this means your totals can be upped significantly with your supporting activities, or those activities might not be included at all.

Our guide to apportioning your energy costs covers how that calculation impacts your relief.

What counts as a supporting activity?

A supporting activity is anything on site that helps manufacturing take place but isn't the production line itself.

The guidance lists these as eligible, provided they support eligible production:

  • machinery outside the main line that is necessary for production
  • heating, ventilation, air conditioning and other space conditioning
  • chillers and process cooling
  • compressed air systems
  • lighting
  • IT and control systems
  • material handling and on-site logistics
  • quality control, including testing
  • charging of electric vehicles used in production
  • corporate offices, such as sales and HR
  • repairs
  • interim storage
  • research and development

What doesn't count as a supporting activity?

The guidance is just as clear about what to leave out.

  • machinery on a production line for an ineligible product
  • activities used solely or mainly for ineligible production
  • transport between sites
  • activities whose main purpose isn't to support manufacturing on site
  • activities carried out for the use of others

A site that only stores, sorts or distributes goods isn't a manufacturing site in the first place. Interim storage within a manufacturing site is different, and does count as a supporting activity.

How are supporting activities apportioned?

Supporting activities usually serve both eligible and ineligible production, so BICS applies a banding rule to decide how much of the electricity counts as eligible:

  • 25% or less of share of the activity that supports eligible production: 0% treated as eligible
  • More than 25% but less than 50%: 50% treated as eligible
  • 50% or more: 100% treated as eligible

This is the same banding used for the exemption itself, so the effect is a step rather than a gradual scale. The thresholds can be applied activity by activity or to your supporting activities as a whole.

The banded relief means that you could be using just over 50% of your HVAC on eligible manufacturing but be including 100% of those HVAC costs in your application. Equally, you could be just under 25% and find that your supporting activities can’t be included at all.

A worked example

A site's compressed air system uses 100 MWh over six months, and 40% of that supports eligible production. That falls in the middle band, so 50% of the electricity counts as eligible: 50 MWh.

Its lighting uses 60 MWh, and 60% supports eligible production. That's in the top band, so all 60 MWh counts.

Its HVAC uses 80 MWh, but only 20% supports eligible production. That's in the bottom band, so none of it counts.

Since the company can choose how they calculate their supporting activities (as a whole or by each supporting activity), it’s worth modelling how both shake out.

If supporting activities are counted as a whole, this is a total of 92 MWh that support eligible manufacturing over a total of 240 MWh on supporting activities in the factory. This is 38.3% that qualifies, putting it in the 50% band. This means the company can include 120 MWh (50% of 240 MWh) in their calculation for their eligible activities. Counting by individual service, 110 MWh qualifies.

These figures are illustrative, but they show why the split matters. Those results then feed into the overall calculation, which our guide to estimating and apportioning your energy explains. The way you count your supporting activities could be the difference between bands, bumping you from a 50% exemption to a 100% exemption.

How do you evidence it?

You'll need a reasonable basis for each split. Useful evidence includes:

  • site maps and process diagrams showing what each system serves
  • production data showing how much of the site's output is eligible
  • sub-metering or monitoring data, where you have it
  • quality control records linked to eligible batches

If you don't have sub-metering, you can estimate and explain your reasoning in the free-text statement. Keep the working, because it may be requested later.

What about corporate offices?

Offices are included, including sales and HR, where they support on-site manufacturing. A site shared with unrelated activity is different. Infrastructure or machinery serving third parties doesn't count, so make sure your estimate reflects only what supports your own eligible production.

Key takeaways

  • Many supporting activities qualify. Compressed air, HVAC, lighting, IT, material handling, testing and offices can all count.
  • The share that supports eligible production decides the result. Below 25% counts for nothing, and 50% or more counts in full.
  • Some things never count. Inter-site transport and activities for others are excluded.
  • Evidence the split. Maps, production data and sub-metering all help.

Supporting activities can be the largest swing factor between tiers, so a careful split is worth the effort. If you'd like help working out yours, speak to the Energy Relief Vault team and they'll walk you through it.