100% Annual Investment Allowance (AIA) – What next?

ScotiaAccounting  |  15th June

The annual investment allowance is a great form of tax relief for all sizes of businesses. It allows you to claim 100% on the capital expenditure of just about any asset (apart from cars) in the year that you acquire it. This is opposed to having it spread over a number of years by using the more conventional approach (main rate of 18%).

In addition to this the limit you can claim is currently at a whopping £500,000 which, in general, is more than enough for most businesses and it can be claimed at any point in the accounting year when the expenditure occurred?

Therefore, if you have a cash rich company invest in that piece of equipment you needed or the delivery van you’ve been thinking about. After all, the money is best spent on your business rather than going to the tax man at the end of the year. Every business is eligible so speak to your accountant on how best to use the relief.

However, there may be problems ahead. The AIA’s limit of £500,000 is set to expire at the end of this year and George Osborne has not made up his mind on what the new limit will be. There were discussions that it will decrease to a measly £25,000! His advisers have stated that this would be unacceptable but the original increase to £500,000 did cost the government £2 billion when it was announced so don’t write off a huge reduction.

Best plan of action is to plan your asset investment now and make good use of the current high allowance. Speak to your accountant and set out a plan of what you require, the cost involved and how you aim to finance it all.

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