Extension of Annual Investment Allowance (AIA) at £1 million
Post Author:
Rona Burns
Date Posted:
November 17, 2020
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The Annual Investment Allowance (AIA) allows businesses, incorporated and unincorporated, to claim 100% capital allowances on their eligible capital expenditure (plant, machinery, fixtures and energy efficient systems) up to a certain limit prescribed by the Government.
The AIA is currently £1 million per annum, having been set at this level for a temporary period from 1 January 2019 to 31 December 2020. This allowance was set to fall back to £200,000 per annum on 1 January 2021, with a complex formula to work out the maximum allowable expenditure for periods which straddle the 1 January 2021 limit change.
The Government have announced that the increased AIA of £1 million per annum will now be extended for a further 12 months therefore the decrease in AIA will now come into force on 1 January 2022, unless amended or updated by the Chancellor in his next budget.
This is good news and will allow businesses additional time to make any required capital purchases and receive upfront tax relief on their investment.
Photo by Luke Besley on Unsplash
