Back in the 2012 Autumn Statement it was announced that, for a period of two years from 1st January 2013, the maximum amount a business can claim under the Annual Investment Allowance (AIA) would increase to £250,000. Previously, since April 2012, the limit was set to £25,000.
The AIA is an allowance for most businesses regardless of size that offers 100% tax relief on most fixed asset expenditure in the year of purchase. The measure was introduced in April 2008, and is designed to boost growth, particularly for small and medium sized businesses. It is a very valuable relief that can make a real difference to the size of an asset-investing business’s tax liability; it should always be used when possible.
Companies that have a financial year that spans the period where the allowance changes take effect will have to limit the AIA for that year worked-out on a pro-rata basis. You can find more detail on AIA and the recent increase by following this link.
