SMEs ignorant of looming deadline for IT tax rebate

SMEs risk missing out on government tax rebates for IT purchases because of a lack of awareness about the incentive, which...

SMEs risk missing out on government tax rebates for IT purchases because of a lack of awareness about the incentive, which terminates at the end of next month.

Small firms with less than £2.8m turnover and fewer than 50 employees have until 31 March to take advantage of the 100 per cent capital allowance on IT products, including upgrades, before it reverts to 40 per cent.

A survey by Marketing Improvement reported that 77 per cent of small firms were unaware of the deadline, but found that when told about it, 58 per cent said they would bring forward some of their IT purchasing.

Marketing Improvement director Tim Beadle confirmed that more than half of the SMEs questioned were unaware of the capital allowance.

He said the tax break had been set up to improve business adoption of IT. According to last week’s The Global Information Technology Report 2002-2003: Readiness for the Networked World (GITR), the UK is ranked 56th in terms of the successful promotion of IT.

Beadle claimed there had not been a great deal of promotion for the tax incentive: “Given the parlous state of the IT industry, we would have expected vendors claiming to be focusing on SMEs to have publicised this more.”

A spokesman for the Federation of Small Businesses said the government had to do more to promote IT. He argued the “last-minute” revelation for many SMEs about the tax break indicated that not enough promotion of the incentive had been carried out.

Acer sales director Paul Cook said it had seen business increase as a result of the scheme, but added more promotion was needed to make SMEs aware of the looming deadline.

Read more on IT for small and medium-sized enterprises (SME)

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