BT and Virgin Media claim 'broadband' tax will cost £1.3bn

Rivals BT and Virgin Media have joined hands to collective moan that a forthcoming hike to business rates will result in tripling of their collective tax bill to £1.3bn over the next five years.

The Valuation Office Agency‘s revaluation of business rates will come into force on 1 April 2017. But Virgin and BT complained the new regime will mean a higher tax rate for their property plant and equipment assets, which could adversely affect their broadband investment plans.

The businesses complained the hike in rates "sends a worrying message and goes against the government’s ambition to increase investment."

In their press release, the telcos included a comment from Matthew Howett, telecoms analyst at Ovum, who criticised the changes.

He said: “At a time when the government is trying to encourage private sector investment in the next generation of broadband infrastructure and reduce the digital divide, it’s a backwards step to hike business rates and not think this will directly affect the number of additional premises that could be connected.”

However, the government recently offered a tax holiday for fibre pushers rolling out new pure fibre networks in the UK.

The 100 per cent business rates relief for new full-fibre infrastructure will come into force on April 2017 and will last for five years.

Communities secretary Sajid Javid recently hit out against the "scaremongering" around business rate changes.

He said: "The revaluation of business rates, which will come into effect in April this year, will mean businesses across the country will get lower bills that accurately reflect changes in their local property market."

It's not the first time BT and Virgin have joined forces. Unlike many telcos, Virgin Media publicly called on Ofcom not to force through a structural separation of Openreach from BT in its Digital Communications review last year. ®