Chancellor Gordon Brown has resisted calls to reinstate tax breaks for companies buying IT, but said in his pre-Budget speech last week that the UK must "invest now" in technology research to compete against the burgeoning Asian economies.
The Federation of Small Businesses (FSB) had called on Brown to re-introduce the 100 per cent first-year allowance for IT, which encouraged SMEs to upgrade their IT infrastructures. But the allowances did not figure in the pre-Budget report.
"The Britain of long-term economic strength will be the Britain that resolves to invest in hi-tech, high-value-added manufacturing and services through world leadership in science and technology," Brown said.
An FSB representative said: "The 100 per cent first-year tax allowance would be a very effective measure to introduce. It was well used before it was scrapped, and we are very disappointed it did not make a reappearance."
Probal Sil, business development director at VAR Elyzium, said the allowance had encouraged spending and that IT take-up among SMEs had "slowed over the past year".
Sil added that tax incentives for firms doing business online would also have been helpful.
Paul Barlow, managing director of reseller Equanet, called for tax breaks to help businesses invest in IT, particularly in security technologies. He said more should be done to cut red tape.
The FSB representative said he was pleased Brown did not tweak the tax regime, potentially causing "further confusion for small businesses".
The group had also been looking for reassurances that any cost-cutting drive would not undermine moves to improve access to contracts for SMEs.
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