TaxCorporate TaxDTI to give SMEs big tax breaks

DTI to give SMEs big tax breaks

Millions of pounds could be up for grabs for resellers, following a decision from the Department of Trade and Industry to give SMEs tax breaks on IT spending.

Link: More SMEs going under in 2003

The DTI is also doubling the turnover threshold that defines an SME from £2.8m to £5.6m.

Following the changes, which are planned to come into effect in January, most small firms will not be required to have their accounts audited and will receive tax incentives when they buy IT equipment. The move promises to save small firms at least £94m a year. An estimated 31,000 firms will qualify for ICT tax breaks.

The move, which is in line with chancellor Gordon Brown’s budget statement in April, is part of the DTI’s efforts to support smaller firms. Patricia Hewitt, trade and industry secretary, said: ‘SMEs are an essential part of our economy. This will help them to be competitive and maintain the UK’s pole position.’

Bob Tarzey, service director at analyst firm Quocirca, welcomed the move, but said the DTI should pay more attention to the channel. ‘The government should target its message not just at the companies themselves, but at the channel that serves them,” he said. “If VARs understand how these tax incentives work, they can help drive their sales in the SME market.’

Jeremy Keefe, sales director at Logical, said: ‘This news is good for the channel and it will open up a lot of opportunities around services. This is because many small companies need help and support as well as products.’

But Manny Pinon, sales and marketing director at distributor Norwood Adam, was more cautious. ‘There are only certain small firms that can afford or need new technology,’ he warned.

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