A third of SMEs unaware of capital allowances 0 comments
Just one in three small businesses are aware that they can reduce their tax bill by claiming allowances for outlay on new equipment, according to research from Cambridge University's Centre for Business Research (CBR).
The report blames the Government's failure to promote capital allowances and has prompted calls for a change to the system.
The CBR survey of 2,500 small firms also revealed that of the third of small firms that were aware of capital allowances, just five per cent were taking advantage of them.
"The survey shows that HM Treasury needs to rethink the current capital allowance regime," said Stephen Sklaroff director general at the Finance and Leasing Association (FLA), which sponsored the research. "More needs to be done to spread awareness among SMEs, and the same allowances should be available for both leased and purchased assets. This would lower costs for small businesses, and provide the economy with a much-needed investment boost at just the right time."
Businesses can claim capital allowances on certain purchases or investments, such as machinery, property, and research and development. Firms can deduct a proportion of these costs from their taxable profits and reduce their tax bill.
According to the FLA, the current capital allowance system does not support the typical pattern of SME investment, which often involves leased assets that are ineligible for capital allowances, rather than outright purchase.
Sklaroff added that if capital allowances could be transferred when a company leases an asset rather than purchases it, the number of SMEs that make use of the scheme would be much greater.
"The increased allowance would lead to lower rental payments for the business, and would encourage investment, particularly in environmentally-friendly assets, where 100 per cent of the cost of the investment can be claimed as an allowance," said Sklaroff. "At the moment, the lessor can only claim 25 per cent of the cost of the investment back."
Responding to the results of the survey, an HM Treasury spokesman said that the government did not believe that the current capital allowance regime for SMEs was failing.
"Take-up of capital allowances by SMEs is between 50 and 60 per cent," he said. "The capital allowances system is a long-established and familiar system, which is well liked and understood by the majority of businesses.
"Furthermore, the system has been made even more generous by changes introduced from April this year," he added.
Since April 2008, small businesses buying equipment can claim a 40 per cent annual allowance, while firms investing in green assets can claim first year allowances of 100 per cent.
Unilever recently announced plans to source our entire tea supply sustainably 0 comments
It's a move set to improve the lives and livelihoods of millions around the world and revolutionise the entire tea industry.
Sustainably-souced tea
As the world's largest tea company, currently buying around 12% of the world's entire black tea supply, Unilever is becoming the first-ever business to source all its tea sustainably.
Working with Unilever is Rainforest Alliance, an independent non-governmental organisation concerned with promoting biodiversity and sustainable livelihoods. With a strong track record in sustainable certification, particularly for coffee and fruit, Rainforest Alliance will be responsible for auditing and evaluating the tea farms that supply Unilever against a comprehensive range of sustainability criteria.
Target 2010
Lipton, the world's best-selling tea, will be among the first to carry the Rainforest Alliance logo, showing that they meet the sustainability criteria. The plan is to have all Lipton Yellow Label tea bags sold in Western Europe certified by 2010 and all Lipton tea bags sold globally by 2015. The first certified tea will be available to restaurants and the catering trade in Europe from August this year.
Two million to benefit
The wide-ranging criteria for certification include social and environmental issues and will have a tangible impact on quality of life.
"What this means overall is that the producers – up to two million people around the world who are producing Unilever tea – will have an opportunity to improve their water supplies, to protect wildlife, to live in dignified housing, to ensure protection against chemicals, and to really take care of their families – as well as the planet on which we live," says Tensie Whelan, executive director of Rainforest Alliance.