With the super-deduction tax relief scheme planned to come to an end on 31 March, many will be evaluating the impact of Rishi Sunak’s flagship investment incentive from his time as Chancellor.
The verdict from London’s SMEs, according to new research, is loud and clear – it didn’t do enough. Just 44% have taken advantage of the scheme, and over 1 in 2 (56%) say the Government isn’t doing enough to support SME investment.
The study, conducted by independent finance broker Charles & Dean, found over a third (36%) weren’t aware a business of their size could use the super-deduction, and almost a third (32%) say it doesn’t go far enough to encourage them to invest. And given the turbulent economic landscape, almost 1 in 5 (18%) say they can’t afford to invest even with tax break incentives.
Despite a lack of faith in the Government’s support, London’s SMEs are otherwise showing signs of optimism – while just 59% made a significant business investment last year, 96% expect to invest in 2023, with an average of £316,000 planned over the course of the year.
Simon Grace, Director and Co-founder, Charles & Dean said, “The UK has historically suffered from a stagnation in productivity, largely stemming from chronic underinvestment in the private sector. If SMEs – arguably the backbone of London’s economy and accounting for 99.9% of the business population – can kickstart business investment and fuel productivity and growth, the positive repercussions will likely be felt by the entire economy.”
Indeed, much of the planned investment by London SMEs is earmarked for growth-driving areas, with marketing spend planned for almost 1 in 3 (32%), and other priorities including plant and equipment (30%), technology and software (30%), and recruitment (28%). For 1 in 4 (24%), however, managing cash flow will be a target for investment, as the next 12 months paint a mixed picture and senior decision makers prepare to navigate what could still be a turbulent year.
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