Decade-long broadband business rates holiday for Scotland

The Scottish Government is going above and beyond that of its UK counterpart in Westminster by announcing a complete tax break on the business rates of new fibre broadband infrastructure.

Furthermore, the 100 per cent tax relief will last for 10 years, until 31 March 2029.

Presently, the UK government is experiencing a 5-year holiday on the business rates of new fibre-to-the-premises (FTTP) fibre optic broadband infrastructure which began on 1 April 2017. However, due to the amount of time it takes to plan investments over a 10-15-year span, many internet service providers have urged the government to extend the holiday period.

The operators argue that returns would only be seen after a decade of deploying such expensive upgrades.

Legislation detailing this change was laid out earlier this year in February before the Scottish Parliament, which also featured in the government’s Budget 2019-2020 statement.

In the meantime, as part of Scotland’s £600 million Reaching 100% Programme (dubbed “R100”), the government is facing the difficult task of choosing a network supplier who will be entrusted with the mission of achieving universal coverage by the end of 2021 – March 2022 in terms of financial year. The aim will be to deploy 30Mpbs+ superfast broadband across the whole of Scotland so as to support the UK government’s universal service commitment.

The tax break on broadband business rates is merely an act to support the universal initiative.

This legislation will increase the affordability of extending full fibre FTTP networks across Scotland, especially as the country has an abundance of rural space through which trenches need to be dug for cables to be laid. By extension, the tax break will ensure that this is viewed as a lucrative investment, in particular by those bidding on the R100 contract.

Despite the positivity the legislation brings, the new fibre infrastructure must maintain compatibility with EU State Aid laws, unless Brexit affects changes in due course.