IT managers should reconsider their strategies for investing in IT hardware in light of new rules on capital allowances introduced in the Budget, according to tax experts.
Gordon Brown has cut capital allowances on most IT equipment from 25% to 20%, reducing the amount large firms can claim against their tax bill. The chancellor also introduced an annual investment allowance that will let smaller businesses offset capital investment, including IT, up to £50,000.
PricewaterhouseCoopers tax partner John Whiting said IT managers should revisit their procurement strategy before the new regime comes into effect in April 2008.
For big business, it could add to the advantages of outsourcing, he said. "I do not think we will see a big change, it will not end buying in favour of leasing or outsourcing, but you cannot get away from the fact that the allowances will not be as good. You might tip towards outsourcing outside the UK, but overall for big business it makes the UK more attractive."
Smaller businesses may want to put off significant IT purchases until after April next year, when the annual investment allowance becomes effective, Whiting added.
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