Deadline looms for 100% IT tax break

Tax breaks for small businesses investing in IT equipment could be axed, just as thousands more businesses become eligible to claim it, warn tax experts.

Expenditure on such items as computers, internet-enabled telephones, 3-G mobile phones and scanners can attract 100% capital allowances.

Roy Maugham, tax partner our London office says:

“There is some concern that this valuable allowance may be reduced or scrapped in this years Budget on 17 March. It was due to end anyway on 31 March 2004, having already been extended last year. A recent change in the definition of companies that count as ‘small’ has made an extra 60,000 companies eligible for the tax break. But the Chancellor could easily snatch this away on March 17th,” he warns.

A small company used to be one with a turnover of up to £2.8m, a balance sheet of up to £1.4m and under 50 employees. But under new rules that took effect from 30 January 2004, the turnover ceiling has doubled to £5.6m and the balance sheet limit to £2.8m, though the employee limit is unchanged.”

For more information on our Taxation Services visit our Services area.