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IT industry calls for tax incentives

Nick Huber
The IT industry is hoping for generous tax incentives for investment in IT training as well as research and development when the chancellor Gordon Brown delivers his budget statement today.

Philip Virgo, strategic adviser to the Institute for Management of Information Systems, called on Brown to exempt employees and employers from paying income tax and national insurance contributions on full-time IT training.

"This would massively cut the after-tax cost of [IT] training," said Virgo, who also called for the introduction of a 100% capital allowance for investment in broadband infrastructure.

Suppliers' group Intellect urged the chancellor to increase the ceiling on R&D tax credits to 10% from the current levels of between 3.75% and 5%.

It also called for the definition of R&D to be clarified to encourage more investment in innovative technology and help close the productivity gap with the US and some European countries.

"Unfulfilled commitments to improve the incentive system will not help the UK," said Tom Wills-Sandford, Intellect's director of campaigns. "Action is what is needed if the UK high-tech industry is to remain competitive in the knowledge-driven economy."

The Professional Contractors Group called on the chancellor to rethink plans for tax rises hinted at in last year's pre-budget report. "We are concerned that Brown will introduce another IR35 tax which will hit contractors and dissuade people from becoming freelance IT staff in the UK," said Simon Griffiths, chairman of the PCG.

The Institute of Directors said tax breaks for IT purchases made by small and medium-sized firms should be expanded. Currently, although small firms can claim 100% first-year capital allowances on computer hardware, medium-sized firms can only claim 40% first-year capital allowances.

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