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UK tech companies call for government tax breaks

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UK technology firms are calling on the government to slash taxes to help create thousands of new jobs in the IT sector.

According to a report in today's Financial Times, the likes of Alchemy, Iris, Kewill and other IT players in Blighty think that UK.gov should recognise the strength that the 1.5 million-strong tech workforce brings to the British economy.

“It is now widely recognised that we need to rebalance the UK economy. Rightly, there’s a rush towards engineering and manufacturing. But software and technology are also going to be at the heart of growth in the 21st century,” Intellect director-general John Higgins told the newspaper.

“We ask why, when the UK has world-class science, managers, software engineers and international tech companies working here, there are too few UK tech companies in the FTSE 250?” said Higgins.

The comments followed the Tory party's publication of its so-called "technology manifesto" last week.

Some leading UK tech firms, whose execs are currently finalising details of their own manifesto, want the government to bring in tax cuts in the IT sector to help improve growth in that market.

They are calling on the government to extend the R&D tax credits currently only set aside for small companies to all-comers. Accountants Ernst & Young estimated that such a move could create 131,000 new, UK, tech jobs.

At present, SMBs of fewer than 500 workers pulling in sales of less than €100m a year can get tax cuts of up to 175 per cent of what they spend on research. Since its inception about a decade ago the system has coughed up about £3bn worth of support to businesses in the UK.

In August 2008 the Treasury confirmed that the rate available for qualifying SMEs investing in R&D would increase from 150 per cent to 175 per cent of their outlay. At the same time it also upped the size of a firm that could qualify for tax relief from 250 staff to up to 500 employees. The associated limits on balance sheet value and turnover were also doubled.

Accordingly, some in the UK tech sector now want the Treasury to extend that love to even bigger players in the IT arena.

The tech firms' manifesto is expected to be published later this week. ®

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