An e-Budget?

There is a good package to encourage small businesses to embrace e-commerce including:

  • Write off the full cost of buying computers and computer equipment;
  • Consultancy services to be provided through the Small Business Service;
  • Internet training for employees;
  • Tax cuts for e-filing tax and VAT returns.

The danger is that this will fuel only the much-hyped ‘business-to-consumer’ end of e-commerce. Business to business activity will be the major productivity benefit, but it requires investment by all sizes of company; the larger the company the greater the small supplier base it is likely to support.

Where is the help for existing larger businesses to encourage the ‘business-to-business’ links that smaller companies can benefit from?

The changes to taper relief will boost investment in smaller companies, many of which will be part of the ‘new economy’ – it encourages gains by allowing investors to retain a greater share of capital profits which encourages sensible risk taking. It is an anomaly, however, that the focus remains on start ups and unquoted companies. What about the next phase of development when new capital needs to be raised?

By ignoring the smaller quoted company sector by not extending accelerated relief to such investments and not allowing these companies specifically to benefit from serial re-investment, there is a danger that there is no vibrant UK market to fund next phase growth. Again this is a good start but no connectivity between a start up and the FTSE-100.

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