A group of trade associations have written to Chancellor Jeremy Hunt calling for a new green super-deduction tax relief to replace the current programme once it ends in March.
According to the eight trade bodies, this enhanced tax break would encourage SMEs to invest in more net zero projects.
At the moment, SMEs do not need to report on their transition to greener technology. However, many smaller businesses will look at net zero considerations as they become increasingly important for their customers.
The signatories to the letter also called for the new relief to include leased assets and those acquired via short-term hire, which the current programme does not cover.
Many smaller firms choose to lease or rent their machinery or equipment as it makes "good business sense" and gives businesses more flexibility with their cashflow.
According to Simon Goldie, director of business at the Finance and Leasing Association (FLA), any programme that excludes these assets is "flawed by design".
He continued:
"Net Zero preparations are no longer the preserve of large firms with big budgets. Green investment is now a competitive issue for firms of all sizes because those credentials matter to suppliers, partners and customers."
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