Annual investment allowance

The Annual Investment Allowance (AIA) provides a 100% tax write off for the cost of most plant and machinery acquired by businesses, except for cars which have separate rules.

In Budget 2014 the Chancellor announced that the allowance would be increased to £500,000 for expenditure incurred between 1st April 2014 and 31st December 2015 (from 6th April 2014 for unincorporated businesses). Thereafter, it was due to plummet to just £25,000.

But in the emergency Summer Budget 2015, it was announced that it would instead only fall to £200,000 for a 12-month period from 1^st January 2016.

There is lots to consider when investing in plant, machinery and vehicles in terms of ownership, finance, VAT and tax relief. Discussing your plans ahead of the purchase, should ensure that you’re fully-aware of the tax position and that we can look for the optimum solution. Please get in touch with your local TaxAssist Accountant if you would like to discuss this further.

Date published 1 Apr 2016

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.