Chancellor sets Annual Investment Allowance at £200,000

The Annual Investment Allowance (AIA) will rise from £25,000 to £200,000 indefinitely from January 2016.

Chancellor, George Osborne confirmed the increase for “this year and every single year” in today’s Summer Budget 2015 speech.

The AIA was introduced back in 2008 to help small businesses increase their productivity and scale with large investments to enable them to claim 100 per cent tax relief on equipment and machinery, up to the limit set for the year of expenditure.

Mr Osborne said the move is a “major and permanent change to incentivise investment” for small and medium-sized enterprises (SMEs) across the UK.

The AIA currently stands at £100,000, but the Chancellor has moved to double the figure from the beginning of next year after suggesting the figure could have been slashed to just £25,000 by the end of 2014 without action.

“Many small and medium-sized businesses have benefitted from our enhanced Annual Investment Allowance,” said Osborne.

“This Allowance was set at £100,000 when we came to office – it is higher now, but without action it will fall to just £25,000 at the end of the year.

“That would especially hit middle-sized companies in areas like manufacturing and agriculture that we want to do more to build up in Britain.

“So I can confirm that the Annual Investment Allowance will not fall to £25,000 but be set at £200,000; this year and every year.

“A major, permanent boost to the incentives for long-term investment by small and medium-sized firms in Britain.”

Date published 8 Jul 2015 | Last updated 8 Jul 2015