Business groups call for digital tools tax relief

Leading business groups have urged the Government to introduce digital tools tax relief to support small and medium-sized enterprises (SMEs).

Experts including the Institute of Directors (IoD) and Be the Business have stated that the coronavirus pandemic has highlighted the importance for small businesses to adopt further use of digital technology and that this should be incentivised to encourage greater uptake.

Research from leading accounting software firms has found that the extent to which SMEs can rebuild and recover from the pandemic relies significantly on ‘how digitally enabled they are’.

Digital apps have seen a noticeable increase in adoption in recent months, with small businesses that used apps to manage their business before the introduction of lockdown measures seeing a 12 per cent smaller decline in revenue, according to a recent report.

Tom Gibson, Head of Digital and Technology adoption at Be the Business, said: “This is a pivotal moment for UK business, and having a time-bound incentive to encourage SMEs to adopt the right kind of tech makes sense.

“However, tax relief or grants won’t work in isolation. Our research has found major barriers to SMEs successfully adopting tech, and these need to be overcome in parallel with financial incentives.”

The business groups have also highlighted the use of Research and Development (R&D) tax credits, stating that a widening of the criteria to include any form of digital investment could encourage more investment in digital tools to support businesses.

With many Government support schemes, such as the Coronavirus Job Retention Scheme and the Eat Out to Help Out scheme, now coming to an end, experts have stated that now is the time to shape how businesses rebuild and recover.

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