American IT companies are increasingly investing in the UK, helping to boost the country’s struggling economy, but better tax incentives could help accelerate this trend, according to a leading US trade envoy.

Suresh Kumar, the Assistant Secretary of Commerce in Barack Obama’s administration, said in an interview with Lewis PR that US businesses are choosing to set up shop in Britain because of its educated workforce, democratic values, common language, robust trading ties and its geographical position as a gateway to Europe, the Middle East and North Africa.

“We are increasingly seeing a trend of IT-related companies, technology-based companies, both big and small, coming to this country, particularly from Utah and Arizona,” said Kumar.

His suggestion is backed up by recent research from the British-American Business Council, which found that the US remains by far the biggest source of investment projects in the UK, accounting for 27 percent of all investment and almost 40 percent of created or safeguarded jobs.

There are now around 3,500 US companies which have a British base. However, Kumar called for the UK to offer more tax breaks to encourage even more American firms to launch in this country.

“There are always avenues to improve. One of the things would be a taxation environment which would be more inviting for particularly small and medium enterprises to set up shop here,” he said.

“While you are seeing companies come, the attraction could be even better if the tax laws really encouraged more companies to set up shop here. Basically, you could make it attractive for those who set up a shop to get a tax break. A better tax regime would be an incentive.”

The UK government has been keen to highlight the role of Britain's IT sector in driving the country's economic recovery. Speaking at an event last week, the Mayor of London's digital advisor Kulveer Ranger said that the 'Tech City' initiative was helping to encourage more business to set up a base in the capital.

Ranger also said the IT community needs to use the opportunity of the London 2012 Olympics, when the spotlight will be turned on the UK, to “set up a shop window and demonstrate our wares”.

Meanwhile, the UK government is attempting to attract entrepreneurs with the recent introduction of lifetime capital gains tax relief for entrepreneurs, meaning that the first £10 million of capital gain is taxed at just 10 percent. The R&D tax credit also means that companies get 225 percent in tax credit for the investments they make in R&D.

Kentucky-based document management company Lexmark recently set up an office in Marlow in Buckinghamshire, and the company expects to grow its business in Britain by 300 percent within the next 5 years.

“American CEOs can establish themselves and gain credibility in the UK much more quickly than they can in some other European markets,” said the company’s General Manager for UK and Ireland is Gary Bourland.

Washington-based F5 Networks also today announced the opening of an International Technology Centre in the City of London, near to 'Silicon Roundabout', to provide training in application and data delivery.