Big increase in tax breaks to encourage business capital investment

The annual investment allowance was temporarily increased from £25,000 to £250,000 with effect from the 1st January this year lasting until December 2014.This means that sole traders, partnerships and companies can now offset the full costs of qualifying capital expenditure in the year that it is made against their taxable profits up to a maximum of £250,000. This could theoretically translate into a tax saving of  up to £50,000 for small businesses. Qualifying expenditure includes vans as well as items you would more normally think of as capital expenditure such as plant, equipment and computers. Capital expenditure financed by hire purchase does qualify for this relief in full,and you can also claim the interest element of your repayments, Lease finance items however do not qualify, instead you can claim the fill cost of the lease payments in the year they are made.