As you are probably aware, from 5^th April 2008, each business has the entitlement to an Annual Investment allowance of £50,000. This means that if it spends up to that amount in a year, it will get capital allowances of 100% on the cost of the equipment and installing it – so essentially it will get tax relief on the whole lot up to £50,000.

If it spends over £50,000, capital allowances would be available at either 10% or 20% depending on what type of asset it is. An asset integral to the building such as lifts, air conditioning etc would get 10% - everything else 20% with the balance carried forward to next year, in both cases, on which capital allowances in following years can be claimed.

Now it has been announced that, for one year only, on expenditure over £50,000 a first year capital allowance of 40% will be available with the balance carried forward for future years.

This applies on expenditure after 5^th April 2009 so is likely to benefit those who will be incurring over £50,000 on capital assets.