Recent research by Three Business indicates that tech-enabled SMEs could add an impressive £79 billion to the UK economy over the next year.
Technology is clearly a key driver and enabler of growth for businesses.
Despite this, their research also revealed a notable 42 per cent of SMEs worry that the complexities of adopting new technologies could hold back their growth. A further 55 per cent express concerns about the costs involved.
The benefits of using technology
There are endless advantages to investing in technology, not least the time it frees up to focus on more strategic initiatives by automating repetitive tasks.
Additional benefits include:
- Enhanced productivity and employee morale.
- Improved customer service using customer relationship management (CRM) systems to help personalise interactions.
- Advanced analytics and data management tools that provide valuable insights into your business operations and market trends.
- Smoother growth experience as tech solutions are designed to adapt to your growing needs without significant changes to your infrastructure.
- Cost reductions in the long run, for instance, cloud computing can lower infrastructure costs, while automation can reduce labour expenses.
Therefore, by effectively leveraging technology, you position yourself as a leader in innovation within your industry.
However, if you fail to utilise the tools at your disposal, you risk falling behind your competitors.
The good news is that there is a growing recognition of the need to invest in technology.
The Government’s recent Industrial Strategy highlights the importance of supporting businesses that can stimulate growth in the tech sector, as well as encouraging the adoption of technologies that enhance productivity.
Using tax reliefs to invest in technology
Investing in new technology does not have to put you in a vulnerable financial situation, as there are various Corporation Tax incentives available for businesses, including:
- Enhanced Capital Allowances (ECAs)
- Research and Development (R&D) tax credits
- Full Expensing
- Other Capital Allowances.
With ECAs, you can claim back 100 per cent of the investment in environmentally friendly technologies on your tax return.
If your business undertakes eligible R&D activities, you could receive a tax credit for your qualifying expenditure – check with your accountant to see if you are eligible.
All these allowances can further offset your taxable profits, reducing your Corporation Tax liabilities and leaving you with more cash to reinvest in your business.
Our expert accountants can help you identify the right technology to support your business goals, including cloud accounting tools that can streamline your financial processes, enhance collaboration, and provide real-time insights into your financial performance.
To make the best use of the tax reliefs related to the investment in technology and innovation, please get in touch.
