Proposed changes to business rates ‘risk slowdown’ in investment, warns BT

BT has warned that expected changes to business rates at next month’s Budget could cost infrastructure firms an extra £400 million each year and “risk a slowdown” in investment.

The telecoms giant and Openreach owner is the latest UK business to warn that it could be hit by proposed changes to commercial property taxes, which are expected to come into force next year.

Supermarket retailers, airports and office firms have already urged the Government to step back from potentially increasing their tax payments from next year.

BT Group currently pays about £375 million in business rates each year for its Openreach broadband network, as well as further rates for its offices and shops.

It has warned that its infrastructure operations will face higher payments over proposed changes to rates.

Chancellor Rachel Reeves has previously announced that premises with a rateable value worth more than £500,000 will face a higher tax band, worth up to 10p on the pound compared with the current multiplier.

The final rate is expected to be confirmed in next month’s Budget.

The Government said the higher rate will be used to finance a permanent reduction in rates for smaller retail, hospitality and leisure firms.

Ms Reeves said her aim was to “level the playing field” between high street shops and online retailers running large warehouses, but BT said the plans will have “serious unintended consequences for the services that keep the country and the economy running”.

The warning comes as the Chancellor continues to seek infrastructure investment in her bid to accelerate economic growth.

Simon Lowth, BT Group’s chief financial officer, said the business’s UK investment plans are “far from done” and still plans to invest billions by the end of the decade.

But he added: “Proposed changes to UK business rates risk a slowdown in infrastructure investment at a time when the nation needs it most.

“The financial impact on firms like BT is currently unknown and will depend on the outcome of ongoing discussions with the Valuation Office Agency (VOA), and on decisions taken at the next Budget on November 26.

“But what is clear is that any increase in this tax on infrastructure could threaten investment across a broad range of infrastructure sectors.”

He added that research by the company suggests that the business rates changes could reduce business investment by £1.4 billion over five years and permanently shrink the UK’s economy by £1.5 billion a year.