Half of UK chemicals SIC codes are outside BICS

The line falls broadly between primary chemical production and downstream formulation, and it is drawn at sector level

Meridian Trade Advisory. 3 August 2026

The eligible activity list for the British Industrial Competitiveness Scheme closed on 8 July. Set it against the chemicals division of the standard industrial classification and the result is close to an even split. Of the sixteen four-digit codes in division 20, eight qualify and eight do not.

The eight that qualify are the commodity and specialist end: industrial gases, other inorganic basic chemicals, other organic basic chemicals, fertilisers and nitrogen compounds, plastics in primary forms, synthetic rubber in primary forms, explosives, and man-made fibres.

The eight that do not are, almost exactly, the formulation and blending end: dyes and pigments, pesticides and agrochemicals, paints, varnishes, printing inks and mastics, soap, detergents and cleaning preparations, perfumes and toilet preparations, glues, essential oils, and other chemical products not elsewhere classified.

A business manufacturing a basic chemical may pass the SIC gate but a business whose activity is paints, adhesives or detergents does not. Passing that gate is not qualification in itself: the business must also manufacture an eligible HS6 product, import at least 33 MWh from the grid, and be registered at Companies House.

The line is broadly recognisable rather than perfectly tidy. Dyes and pigments sit awkwardly on it, being closer to basic chemical manufacture than to formulation, and are excluded nonetheless, but the pattern is clear enough that a manufacturer can see which side of it they fall on.

Why the line is where it is

Eligibility was determined by applying an electricity intensity test at sector level, on top of the frontier and foundational sector definitions from the Industrial Strategy. Sectors above the relevant intensity threshold were included. Sectors below it were not.

Measured across a whole four-digit sector, formulation and blending is less electricity-intensive relative to the value of what it produces than basic chemical manufacture. Electrolysis, air separation, cracking and polymerisation sit at one end of that distribution. Mixing, milling, dispersion and packing sit at the other. Applied consistently, an intensity threshold cuts roughly where this one has cut.

So the mechanism worked as designed. The question is what it does to the businesses on the wrong side of it.

The problem with a sector-level test

Intensity was assessed for the sector, not the company. That means the qualifying question for an individual manufacturer is not how much electricity it actually uses, but how much electricity the average firm in its four-digit classification uses.

A paint or adhesive plant running continuous milling and dispersion, with significant drying load, can be considerably more electricity-intensive than the median firm in its own sector, and more intensive than some firms in sectors that did qualify. None of that is visible to the test. The classification decides, and is drawn from a Companies House filing.

There is a second consequence that is easy to miss. Since the scheme is justified on international competitiveness grounds, an excluded UK formulator now competes with imported product made by firms whose own governments may relieve their electricity costs, while a UK basic chemicals producer one step upstream receives relief. The relative position of the two UK firms has been changed by the scheme rather than by the market.

There is one exception. Companies House SIC codes are frequently out of date, because businesses change what they make faster than they update their filings. A company recorded under a formulation code that has since moved into primary manufacture is misclassified rather than excluded, and DBT has said it will look for evidence beyond the self-declared code in any event.

The appeals route is narrower than it sounds

The government has confirmed an appeals process. It is described as a process for businesses that may have been excluded from the scheme in error.

That is a mechanism for correcting misclassification. It is not, on anything published so far, a route for a correctly classified business to argue that a sector-level threshold produced an unfair result in its particular case. The grounds, the deadline and the evidence requirements have all been deferred to guidance that has not yet appeared.

Which points at an uncomfortable conclusion wherein an unusually electricity-intensive company sitting in a deliberately excluded sector may have no individual route into BICS at all.

That is the direct consequence of the design choice described above. A sector-level test is scalable and objective, and it has no mechanism for recognising an outlier, because recognising outliers is precisely what the rejected business-level test would have done.

Three things are worth doing before the detail publishes.

Check the SIC code recorded against the company at Companies House, and correct it through the next confirmation statement if it no longer reflects the principal activity. Any assessment will start there.

Assemble the evidence of what is actually manufactured, including the six-digit product codes the goods fall under. Of the 1,641 product codes eligible for the scheme, a formulator's outputs may well appear, which does not by itself confer eligibility but is the core of any case.

And do not assume exclusion where a company records more than one SIC code or manufactures across more than one activity. In those cases the answer is genuinely arguable.

The wider point

For the first year, eligibility is defined strictly by the SIC 2007 and HS code lists as they stood on 8 July. The move to the revised 2026 classification has been deferred to the scheme's 2030 review, so this is the definition manufacturers live with for the whole of the first cycle.

That makes the unpublished scope of the appeals process more consequential than it looks. The decisive question is not how difficult an appeal will be. It is whether a correctly classified business in a deliberately excluded sector has any route at all. The published wording does not yet establish one.

Method and sources

The eligible list is DBT's *Annex A: SIC and HS codes eligible for BICS*, the ODS file updated 8 July 2026 and published with the government response to the consultation on scheme eligibility and approach. GOV.UK describes it as the final list for 2027. The comparison above sets all 84 eligible SIC codes against the full contents of division 20 of the UK SIC 2007 classification.

The appeals commitment, the SIC 2007 basis and the deferral to the 2030 review are from the government response to the consultation on regulatory changes and scheme delivery, published 8 July 2026. Appeal grounds, deadlines and evidence requirements have not been published at the time of writing.

If you think I have got something wrong, tell me and I will correct it.

Anthony Salasidis is the founder of Meridian Trade Advisory, which advises UK manufacturers on BICS eligibility, pro-rating and evidence. anthony@meridiantradeadvisory.co.uk