Tax incentives to invest in qualifying assets

The Annual Investment Allowance (AIA) limit is a generous capital allowance that will more than cover the annual capital expenditure spend of many small and medium sized businesses. The AIA is a 100% upfront allowance that applies to qualifying expenditure up to a specified annual limit. The limit has been fixed at £200,000 since 1 January 2016.

The AIA can be claimed for qualifying expenditure on plant and machinery by an individual, partnership or company carrying on a trade, profession or vocation, a UK non-residential property business or a furnished holiday let. Partnerships or trusts with individuals and companies in the business structure do not qualify for the AIA.

The AIA is available for most plant and machinery purchased by a business, such as machines and tools, vans, lorries, diggers, office equipment, building fixtures and computers. The AIA does not apply to cars, items owned for another reason before you started using them in your business or to items given to you or your business.

Planning note

With the end of the tax year approaching, now is a good time for businesses to ensure that they make the most of the available capital allowances reliefs for the current tax year including claims for first year allowances and business cars.

If you intend to invest a significant amount before the end of your current trading year please call us to discuss strategy, so that we can ensure you make the most of reliefs available.

Posted in Capital allowances

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