Budgets don't need to be so taxing

Those that lease IT kit are in the enviable position of being immune to the chancellor's meddling, writes Philip White.

You remember 1997. It wasn't that long ago. It was the year of Cool Britannia, Dolly the sheep, Girl Power and the rise of the Tellytubbies.

It also featured Gordon Brown's first budget. In those days, there was talk of the "new and fast-changing global economy" and "rapidly advancing technology".

The growing excitement about IT had not yet become translated into hard and fast policy decisions, and its impact on business, though significant, had yet to be fully realised.

Seven years later, things couldn't be more different.

The last budget proved a bit of a mixed bag for the IT industry. On the one hand, Brown stressed the importance of IT investment to the UK economy. On the other, he ended the tax breaks for SMEs investing in IT.

It is great news that Brown these days considers IT to be fundamental both to the implementation of his budget and also to the development of the British economy as a whole.

This confidence should encourage spending in the industry, and resellers just need to make sure that potential customers feel they are rich enough to make the investment.

With this in mind, ending the tax breaks for SMEs might seem like a stumbling block.

Indeed, industry commentators have suggested that the timing could not be worse for those SMEs that delayed investing in technology over the past financial year and now find they have lost that important tax advantage.

So how can we help SMEs to beat the budget and encourage them to keep spending?

The answer may lie with a particular group of companies that watch the chancellor's budgets come and go with every confidence that he cannot touch the tax efficiency of their IT spending.

These are the companies that lease their high-tech kit, and resellers might suggest to this year's budget casualties that they do the same.

Leasing has always been a tax-efficient way to acquire IT because the fixed costs associated with acquisition are written off immediately against tax.

SMEs are traditionally vulnerable to market changes and rarely have the up-front capital to pay for IT investment outright.

Even with government help, such as the extension of R&D tax relief, a lack of access to IT can make business development nigh-on impossible.

Finance and leasing can help these businesses in many ways.

The flexibility of a lease can enable businesses to meet their technology requirements immediately, without breaking the bank, without affecting their bottom line and - sorry, chancellor - with a 100 per cent tax allowance.

Philip White is sales director at Syscap.