Chancellor Hunt made permanent the policy of full expensing which allows certain companies to deduct capex from their taxable profits
Last week, BT Group’s CEO Philip Jansen urged the UK’s Chancellor of the Exchequer to make permanent the full expensing arrangement in his Autumn Statement. Jansen got his wish which boosted BT’s languishing share price by almost 4%, to 124 pence, on the London Stock Exchange.
The full expensing measure was put in place after COVID to help the UK’s economic recovery and was due to expire in 2026. It allows companies to deduct capital expenditure from their taxable profits, reducing the overall tax bill and, of course, telecoms is a capital-intensive business. It also boosts that all-important positive free cash flow.
In urging the UK’s Chancellor to take the step, Jansen said the move would be a “game-changer… that would give businesses like BT Group genuine long-term certainty to plan and shift the investment environment in Britain from good to great.” However, delivering on that claim won’t be Jansen’s responsibility as he is stepping down, to be replaced in the New Year by Allison Kirkby.
In the fiscal year 2027-2028, it is estimated this will cost the state £9.1 billion, while individuals’ tax burden is the highest since World War II, although lower than many of their European neighbours.
Lack of joined-up thinking?
Darren Pearce is Group CEO of TXO which describes itself as “a circular economy company”. It works to extend the lifetime of telecom equipment, help operators address their sustainability goals and advance their network.
He said of the Chancellor’s move, “While incentives and funding to support the expansion of connectivity in the UK will always be welcome – connectivity supports so much of how we contribute to society today – the Government must consider policies that ensure our networks are built with sustainability front-of-mind.
“We’re currently undergoing a once-in-a-generation network evolution that is seeing older technologies in both fixed and mobile networks rapidly replaced by future-ready 5G and fibre. As things stand, there is no requirement for operators to do this sustainably. The Government must consider a holistic strategy that means replacing network technology and building more fibre is done through a circular economy lens, not just incentivising more shovels in the ground.”