Making use of Enhanced Annual Investment Allowances
A guide to making the most of government initiatives for small enterprises
Last year’s Autumn Statement announcement brought some highly encouraging news for British technology companies and small business. Chancellor George Osborne revealed that corporation tax will be reduced to 21 per cent from April 2014 and that figure was revised down again to just 20% in the Budget 2013. In addition, it was announced there would be a tenfold increase in Annual Investment Allowances from £25,000 to £250,000. These moves are positive steps that are set to be of great benefit to non-tech SMEs investing in the technology and tools to get themselves up and running with the most up-to-date technologies.
At a time when many organisations are struggling to justify investment in IT, these new Government initiatives are sure to be welcomed by businesses both large and small. However, as the engine room of the economy, SMEs and fast-growing businesses should view these announcements as particularly positive. The tenfold increase in Annual Investment Allowances is a clear indication from the Chancellor that the government is looking to growing businesses to stimulate economic recovery and business investment. This crucial move is also an attempt to boost the economy and indicate to other countries that welcomes and supports start-ups and entrepreneurs.
There is no doubt that there will continue to be a squeeze on budgets and spend going in to next year for businesses of all sizes. This will require companies to think carefully about how they use innovations in technology to maintain and improve services. It will also make it all the more vital to ensure that any technology invested in is as effective and efficiently purchased as possible. In turn, this will mean a greater focus on the long-term benefits of solutions, giving businesses the opportunity to reflect on what is already available within an organisation’s technology estate.
Technology should never be bought simply for technology’s sake. It should always be seen in the context of a wider business investment. Businesses must be sure that the money that is spent today is also spent wisely for tomorrow. Only then can you get the maximum value from it. It is also worth considering working with a third party when considering any large scale investment as they will be able to give an honest and unbiased view of solutions based on system and employee requirements, future plans and, most importantly, what is technology is already in place. Not only can this help to reduce costs, but it can also ensure agility and make sure that any purchases made are as future-proofed as possible.
The key steps for any business wanting to make use of the enhanced annual investment allowance for technology can be boiled down to four points:
- Take stock of your current IT estate
- Predict, as best you can, your future needs
- Consider unbiased third party advice, taking potential savings that can be made through BYOD and bespoke licensing schemes into account
- Review spending against annual investment allowance criteria
With careful planning, businesses can use the allowance to make game-changing upgrades to their IT estates with a minimal outlay, giving them the chance to steal a march on the competition.
By Vicky Godliman, Group Finance Director at Trustmarque