Fibre tax, officially known as business rates on telecommunications infrastructure, is a significant consideration for network operators in the UK. These taxes are levied by local councils on broadband network assets, including fibre optic cables, and can substantially impact financial planning and operational costs.
Recent Developments:
- End of Rates Relief: In April 2017, the UK government introduced a five-year 100% business rates relief for new fibre infrastructure to encourage the expansion of high-speed broadband networks. This relief applied to ‘new fibre’—defined as fibre laid, flown, blown, affixed, or attached on or after 1 April 2017—and expired on 1 April 2022.
- Resumption of Fibre Tax: Following the expiration of the relief period, fibre tax is now levied by councils as business rates on all broadband network infrastructure in England and Wales. This includes both lit and dark fibre, with underground fibre treated as part of a company’s rateable premises, similar to offices or retail spaces.
Key Considerations for Network Operators:
- Assessment of Tax Liability: It’s crucial to determine whether you are currently being billed for fibre tax and, if so, understand the rate applied. This could be calculated per connection or per kilometre of fibre laid.
- Accrual Practices: If not currently billed, assess what accrual rate you are using for future tax liabilities. Ensure that your accrual practices accurately reflect potential obligations to avoid financial discrepancies.
- Impact of Legal Developments: Recent legal developments may indicate that some operators are over-accruing for fibre tax, which could significantly affect financial projections. Staying informed about these changes is essential for accurate financial planning.
Next Steps:
Given the complexities surrounding fibre tax and its implications for your business, it is advisable to consult with experts in the field. For further information and to assess how these developments might impact your operations, please contact:
Aidan Paul FCMA CGMA CEng MIET CDipAF
Managing Director, Dolomite Solutions Limited
Mobile: +44 7785 375840
Dolomite Solutions Website
By proactively managing your fibre tax obligations and staying informed about regulatory changes, you can ensure more accurate financial planning and potentially reduce unnecessary expenditures