Annual investment allowance increased to £1m from January 2019

The Annual Investment Allowance (AIA) is a form of tax relief for businesses that is designated for the purchase of business equipment. It allows a business to deduct the total amount of qualifying capital expenditure up to a certain limit from its taxable profits.

Nicola Roby, Tax Director at CHW Small Business Accountants in Bolton explains what the allowance is and the imminent change.

AIA is essentially a capital allowance that enables a business to write off the cost of most items of plant and machinery in full against profits in the year in which the expenditure is incurred.

AIA is available for most items of plant and machinery. This includes capital items used in the business, such as equipment, machines, computers and vans. Some integral features are also included such as fitted kitchens, and also alterations to install plant and machinery and any costs of demolishing plant and machinery.

Cars are not included along with items owned for another reason before they were used in the business, or items given to the business or business owner.

Using the AIA, businesses can deduct the full value of qualifying plant and machinery from their profits before tax.

Since it was introduced in 2008, the AIA limit has changed several times. It is currently £200,000 per annum.

However, it was announced in the 2018 Budget and draft 2019 Finance Bill that the AIA for qualifying expenditure on plant and machinery will temporarily increase to £1m per year for the period 1 January 2019 to 31 December 2020 after which it is due to revert back to £200,000.

Suren Thiru, Head of Economics at the British Chambers of Commerce commented “This announcement will provide a major enticement for firms to invest and grow. It will give companies across the UK the confidence to push ahead with investments in plant and machinery, property and staff training.”

Whilst the increase in AIA will allow some businesses to gain more tax relief on their investments, according to HMRC statistics only around 3% of businesses currently exceed the AIA of £200,000, so the other 97% are unlikely to see any benefit from the change.

For further information or assistance on the AIA or any other capital allowances issues please contact Nicola


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

DID YOU FIND THIS USEFUL?

Share it with your network:  

Want more great content?
Sign up to our newsletter

Follow us

Tweets by @CHW-accounting

CHW-Accounting
@chw-accounting


Twitter: chw_accounting

WHAT'S THE NEWS?

Grab a biscuit and a brew and read our latest news.

20 May 2019

How long must I retain my books and records?

by

HM Revenue and Customs ( HMRC ) may check your records to make sure you’re paying the right amount of tax, but how far can they go back & how long should you keep business records?


Read more >

12 April 2019

Claiming back VAT on a vehicle purchase

by

You can usually reclaim the VAT paid on goods purchased for use in your business. However, with vehicles these often include an element of personal or private use. We explain the rules regarding reclaiming VAT on vehicle purchases.


Read more >

1 April 2019

Loans to employees – what you need to know

by

Whilst a business is perfectly entitled to loan money to employees or relatives, there can be tax implications if it does.  Here’s our brief reminder of those implications.


Read more >

28 March 2019

Guide to Payroll Changes from April 2019

by

If you are an employer there are several payroll changes which come into effect from April 2019 of which you should be aware.


Read more >

20 March 2019

Did you know – Uninhabitable properties are not liable...

by

Since April 2016 an additional 3% stamp duty charge has been imposed on buyers purchasing a second home. Irrespective of the circumstances. However, following a recent…


Read more >

YOUR CHALLENGES

No matter what your challenge is, we’ve probably dealt with it before.



Need an Accountant?

Get in touch >


Need an Accountant?

Get in touch >


Tax issues?

Find out more >


Tax issues?

Find out more >


Trying to grow your business?

We can help >


Trying to grow your business?

We can help >


Managing cashflow?

We can help >


Managing cashflow?

We can help >


Starting a business?

We can help >


Starting a business?

We can help >


Looking for funding?

Need help with funding? >


Looking for funding?

Need help with funding? >


Buying or selling a business?

We can help >


Buying or selling a business?

We can help >


Adopt the cloud?

We can help >


Adopt the cloud?

We can help >


What else can we do for you?

We can help >


What else can we do for you?

We can help >
CONTACT US

Get in touch, no hard sell, just a brew, a biscuit and a chat.