Resellers have warned that if the government ends tax breaks for IT purchases in next week's Budget, it could affect spending in the channel.
SMEs can claim 100 per cent of their capital allowance in the first year of buying hardware, software or telecoms kit, but this is due to end in April. The rate is 40 per cent for medium-sized firms.
The Federation of Small Businesses [FSB] is concerned Gordon Brown will not renew the tax break. "It's essential the chancellor gives it a longer life," said Neil Hamper, tax chairman at FSB.
Cancelling the tax breaks would be a blow to resellers, said John Griffiths, public sector consultant at VAR cScape. "SMEs are tuned into what tax breaks there are. [Ending incentives] may affect their buying," he said.
Removing the incentive to invest also would be bad for the overall economy, Griffiths added.
The Confederation of British Industry has lobbied for the tax breaks to be made permanent.
The Treasury said it could not comment before the Budget.
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