Profit-making businesses can now offset 40% of the value of an asset against taxable income on profits, providing a tax deduction to mitigate depreciation of an asset, Darling announced in yesterday's eagerly awaited Budget.

David Bunker, a director of Close Print, said that the increase in capital allowance was "good news for UK machinery dealers and manufacturers".

He added: "Capital allowances at 40% is very good news but the real benefits of this will be for companies earning taxable profits."

The move was part of a number of measures by the government to boost investment in UK industry, including a £750 Strategic Investment Fund to support high-tech and environmental projects.

In addition, businesses will be able to spread payment of business rates across three years to ease any cash flow pressures as the recession worsens.

Paul Holohan, Richmond Capital Partners, said: "Deferred tax needs to be consistently delivered in all geographical areas. This is currently not the case."

Also see:
Budget 2009 - Live text