2023 Autumn Statement Boosts UK Full Fibre and 5G Builds – Full Expensing
The Chancellor of the UK government, Jeremy Hunt, has today given his 2023 Autumn Statement, which among other things has announced that the new “Full Expensing” policy will be made permanent. The change will help some full fibre broadband and mobile operators to bring down the cost of their network roll-outs. Planning tweaks are also coming.
Autumn statements rarely garner quite as much interest as the annual budget announcement, which usually comes in the spring, but they do sometimes contain the odd update on existing programmes, as well as a few changes and developments that may be of relevance to the wider telecoms sector.
The focus this time around was on whether or not the new “Full Expensing” change, which was introduced in the Spring 2023 Budget, would be made permanent. The policy essentially offered 100% first-year relief to companies on qualifying new main rate plant and machinery investments from 1st April 2023 until 31st March 2026 (i.e. for every £1 invested in IT equipment, plant or machinery, their taxes are cut by ‘up to’ 25p).
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The change built on the success of the prior “Super-Deduction” policy, which has now come to an end, but did still benefit the rollout of full fibre broadband across the UK. Without this change, a network builder might otherwise only be able to deduct a small fraction of the cost of related investment each year over the accounting lifespan of that investment (inflation tends to erode the value of the money operators can claim back in future years).
However, while the change was broadly welcomed, it was initially only introduced as a time-limited measure, which created the risk of a “cliff edge” scenario for those choosing to harness it. The good news today is that the government have confirmed their previous ambition by agreeing to make this a permanent change, which is something that BT’s CEO, Philip Jansen, will no doubt be particularly pleased to hear (here).
Jeremy Hunt said:
“I will today make full expensing permanent, that is the largest business tax cut in modern British history.”
The story is not quite so clear-cut for smaller and less well established alternative networks, which is because most of them will already be running at a loss due to the high cost of network build (reaching payback is often a 10-15 year slog). As such, Full Expensing won’t benefit them like it would more immediately profitable and larger network operators or ISPs, but over the long term we’d hope that may change. Just to be clear on this, Full expensing is only available to companies subject to Corporation Tax.
In addition, the Chancellor mentioned a change to reform the planning system, which is aimed at speeding up the time it takes for infrastructure projects to be approved. From next year, councils will thus be able to recover the full costs of planning applications, but only provided they meet prompt deadlines (i.e. incentivising faster approvals).
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“A prompt service or your money back – just as would be the case in the private sector,” said the chancellor. At this stage it’s still too early to know how much of an impact this will have on full fibre and 5G mobile builds, at least those that fall outside Permitted Development (PD) rights, but we’d expect there to be at least some improvement.
The full 2023 Autumn Statement document is now online, although it doesn’t appear to contain anything extra for mobile and broadband programmes – at least nothing beyond what we’ve covered before or above.
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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Yeah all spin. Is there an election coming up? You know so they UNELECTED can NOT get ELECTED ?
Unelected parasites bleeding us dry, throwing us a few breadcrumbs in the run up to the election. The British public didn’t elect Sunak and Hunt, even the Conservative party membership rejected them. They have no mandate for these decisions foisted on us.
The political choices this country has to offer are about as appealing as enucleation performed with a teaspoon and no anesthetic.
Shazia Iqbal your either clearly not old enough to remember Gordon brown who was chosen by Blair, and mandelson and campbell to succeed him as prime minister no one got a choice on that not even the labour MPs (let lone the pubic)- or you clearly not been told that or you have chosen to ignore that fact
As I understand it the proposal will only benefit companies who are paying corporation tax, ie making a profit. I don’t believe any altnet will be in that position for many years to come. But perhaps I’ve miss-understood.
Sadly correct and I sort of touched on that above. Full expensing is available to companies subject to Corporation Tax only. But of course unincorporated businesses are still entitled to claim the AIA, which offers the same benefits as full expensing for the investments it covers, albeit only up to £1 million per year and that’s not much help to larger AltNets.
Unprofitable businesses can still claim the full tax deduction, but they don’t get the benefit until they are paying corporation tax, and that could be some years away, in the meanwhile the benefit sits as a deferred tax asset on the balance sheet. However, it’s worth noting that most altnets are private equity funded, and for the financial services sector it is feasible to put altnets into a group structure where deferred tax assets can be be transferred, so I suggest nobody should feel too sorry for the altnets and their investors. Their investors have options to use this, if they choose to.
@Mark – I thought that AIA was also a deduction before tax so you had to have a profit to use it? Its difficult to see how HMRC can help a loss making company, which the altnets are. Perhaps something around depreciation rates, but that would just increase the loss which wouldnt put cash in the bank for the altnet. Rates is an obvious one which has been discussed many times before. Is zero rates on fibre build still on offer? I’ve lost track. NIC contributions are a heavy load on people heavy businesses like the altnets so something there could help.
Irrelevant for most companies
Also does not undo his global Biden business tax hike
They really need to cut taxes or the remaining polled 19% will go lower and lower to Reform UK
No room for anything major.
https://news.sky.com/story/highest-ever-october-state-borrowing-costs-official-figures-show-13010009
Only borrowed more in October during pandemic. Debt interest repayment alone in October was £7.5 billion.
Have to be targeted to try and improve productivity.
There’s no room to steal less from the people because the government is completely overbloated and spends like a homeless crackhead
The UK desperately needs its own Javier Milei
“ Shazia Iqbal says:
November 22, 2023 at 11:44 pm
Unelected parasites bleeding us dry, throwing us a few breadcrumbs in the run up to the election. The British public didn’t elect Sunak and Hunt,”
Sunak and Hunt are both elected MPs.
The UK has never elected the Prime Minister or Chancellor.
Gordon Brown became PM after a handover from Blair.
Sorry you haven’t realised we don’t live in a presidential system.
Members voted for Truss over Sunak because they wanted tax cuts. We got Sunak and tax hikes anyway. Now a year later Truss is being vindicated because they finally figured out we need tax cuts
Fine, Sunak and Hunt have been elected…. Cameron has not though
Labour agrees with all the bad Tory policies. (Though funny enough labour today posted explicitly saying “taxation is theft when tories do it”)
Do you still believe in democracy?