The Budget backs buying.

The Chancellor in his autumn Statement gave a much needed increase to the Annual Investment Allowance (AIA) from £250,000 to £500,000 until December 2015.

The AIA is a kind of capital allowance, which offers tax relief at 100 per cent on qualifying expenditure in the year of purchase. The maximum you can deduct from your taxable profits is now set to be £500,000. This pro-rata’s according to when you purchased the equipment in relation to your financial year end.

Almost any entity can utilise the allowances other than mixed partnerships (that is, partnerships comprised of both individuals and companies) and trustees. Most assets are eligible except for cars, but you should seek advice from your accountant.

The increase in AIA marks a huge change for businesses and it is the view of AFS that the new allowance structure represents an opportunity for many businesses wishing to invest, to make that investment as tax efficient as possible. It could mean that a business would save upto 50p in tax, against every £1 they invest in new equipment.