As the telecoms sector debates the controversy of business rates on fibre networks, one thing we can be sure of is that it is here to stay.  This is certainly the case for the foreseeable future, as the coalition government has gone back on its pre-election promise to review this so called ‘Fibre Tax’.

Whilst FibreSpan has joined industry players by vocalising its objections (read our views in PC Pro), we are committed to helping the market overcome the potential barriers that it could have on network technology selection.  We have taken the step to help business users understand what it means to them and to remove the financial burden of the annual rates.

Read more about FibreSpan’s special promotion to pay your annual Fibre Tax on all dark fibre orders placed before 31 October 2011.

What is Fibre Tax?
Fibre Tax is the term used across the telecoms industry for the government’s business rates on fibre networks. The UK government currently views fibre-optic cable as business property and it is therefore a ‘rateable asset’ with a value upon which business rates must be paid.

How are the ‘rateable values’ determined?
Valuation Office Agency (VOA), an arm of HM Revenue and Customs, is responsible for setting the Rateable Values of all business premises in England and Wales. The standard method used for most companies involves paying a tax when the fibre is lit and is based on the hypothetical rent which could be achieved from renting out the fibre.

So how are the rates calculated?
The local authority calculates and collects the rates based on the Rateable Value. The current rates charge for fibre-optic cable using two parameters - the length of the cable and the number of lit fibres running in it - and in two categories - those running outside London and then a separate one for networks inside London.

What are the current rates?
Rates are based on a phased scale value with rate decrements depending on total network route km and increments depending on the number of lit fibres.  Check out the rating manual on the VOA website to see the 2010 Fibre Rent Scale.

Who is liable to pay the tax?
The operator or organisation that lights the fibre is liable to pay the annual business rate upon assessment by the VOA and receipt of a rates demand from the local authority.

What does that mean to me if I want dark fibre?
Unfortunately the VOA definition for an occupier of two or more buildings connecting them by leasing and lighting their own dark fibre is somewhat lacking in clarity. Cases are assessed on their individual facts depending on how the fibre is being used and how the connected buildings are currently rated by the VOA. Further information is available in the VOA Rating Manual, but our advice is to wait for your assessment.

Why is FibreSpan offering to pay the tax if they are not liable?
We do not want Fibre Tax to stand in the way of organisations making the right technology decisions for their business. Fibre has become the network technology of choice for many organisations across the country and we are taking this bold move to remove the barriers and help fibre become an accessible network option for organisations needing connectivity between multiple locations or wishing to operate their own networks. 

Where can I get further information on Fibre Tax?
The best source of information is the Rating Manual on the VOA website - Section 871: Telecommunications Fibre Optic Networks: National Scheme - Group 5