Tax breaks designed to help small firms invest in new equipment are too complicated and are failing to boost spending, finds research. A survey of 950 businesses by the Finance & Leasing Association (FLA) asks whether the capital allowances rules are clear enough, with just 8 per cent of small and medium-sized enterprises (SMEs) finding them easy to understand.
Some 19 per cent rate them ‘acceptable’, 31 per cent think they are ‘complicated’, and 42 per cent do not know and/or leave it to their accountants. Under the capital allowances system, firms investing in new equipment pay less tax on their profits. The survey also reveals that for 80 per cent of firms, capital allowances have no impact on their investment decisions, which suggests that the allowance is not acting as an incentive for growth, according to the FLA.
The risk for the economy is that small businesses do not have the latest equipment that means they can compete for new business in global markets, continues the firm. Julian Rose, head of asset finance at the FLA says, ‘If small firms are to drive the economic recovery, they need tax investment incentives that are simple to claim.
‘The Open University report shows that the capital allowances system is over-complicated and falls short of providing the support that UK businesses need to encourage them to invest. But the government must simplify capital allowance to help many more of Britain’s SME’s to invest in new equipment or upgrade their existing equipment.’
Similar Posts:
- Green is back on the agenda
- Confidence in job creation shaky
- What are alternatives to bank funding?
- Pension reforms will hit SMEs hard
- Small businesses face challenges when exporting
