Dear Chancellor Jeremy Hunt,
We, the business technology providers including Sage, Shopify, and Zoom, are writing to urge you to consider implementing increased tax breaks for spending on digital services. We believe that these tax breaks will empower small and medium-sized enterprises, enabling them to leverage artificial intelligence and enhance overall productivity – a key concern of the government.
If no action is taken, we fear that Britain’s global competitiveness will suffer, hindering our aspirations to become a science and technology superpower.
In support of our request, we highlight the importance of keeping up with digital adoption and the forthcoming wave of AI deployment across the economy. Falling behind in this aspect poses significant risks to economic growth, competitiveness, and our ability to become a science and technology superpower.
Specifically, we propose that small businesses be allowed to claim up to 140 percent on the first £50,000 spent on productivity enhancing digital services. Additionally, they should benefit from an extra 40 percent deduction against their corporation tax bill, compared to the current allowances for business expenses.
We suggest looking to Australia’s small business technology investment boost as a model. This scheme offers companies with an annual turnover of less than A$50 million (£26 million) an additional 20 percent deduction on technology expenditure.
According to Sage, unlocking the full benefits of technology for small businesses could add an extra £232 billion of value to the UK economy, nearly doubling the current value of tech usage to £448 billion annually.
However, the major obstacle preventing small businesses from adopting technology is the cost. As indicated by Sage, 41 percent of SMEs cite cash flow pressure as their main concern in adopting new technology.
To address this issue and support small businesses, we recommend implementing tax breaks that align with our proposals.
Sincerely,
Business Technology Providers
