Government gives new life to tech tax break

100 percent capital allowances for small businesses investing in IT will be extended for a further year

UK small businesses will be able to offset their spending on Information and Communication Technology (ICT) against their taxable profits for an extra year, Chancellor Gordon Brown announced on Wednesday.

Delivering the 2003 Budget, Brown said that the 100 percent capital allowances for small businesses investing in ICT will be extended for a further year until the end of March 2004.

These allowances mean that a business can deduct the amount of money it spends on additional ICT equipment from its overall tax bill for that year. They were introduced in the 2000 budget and were supposed to run for three years -- but Brown's announcement means they will last for another 12 months, which the chancellor says will benefit small businesses.

"The allowances provide a favourable and stable environment for businesses seeking to invest in technology that promotes greater efficiency and enables them to deal faster and more effectively with Government and other businesses," said Brown.

The government has also changed the definition of small businesses -- according to Brown this means that more than 3 million businesses will now qualify for 100 per cent allowances for investment in IT.

In the Budget, Brown also announced that small companies will continue to be offered financial incentives to encourage them to organise their payroll via the Internet.

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