Businesses urged to take advantage of Annual Investment Allowance (AIA) increase

Businesses urged to make use of a temporary ten-fold increase in the annual investment allowance (AIA) for plant and machinery, which came into force on 1 January.

This means that businesses will benefit from 100 per cent tax relief on £250,000 of investment in eligible equipment for each of the next two years.  The AIA, launched in 2008, originally stood at £50,000 before being increased to £100,000 and then later reduced to £25,000 for investment from April 2012.  The increase to £250,000 was announced by Chancellor George Osborne in his Autumn Statement.

This substantial increase in the allowance will come as good news to many small and medium-sized businesses as it will reduce their cost of investing in new plant and machinery to help take their business forward.

However, this increase will only last for the next two years, so business owners wanting to take advantage of this generous tax relief may wish to consider bringing forward their capital expenditure budget while this allowance remains at this higher level.

Business owners should seek professional advice if they are unsure whether their intended expenditure is eligible for the AIA and generally to help ensure that all investment is as tax-efficient as possible.

For further information, please contact Tim Preece (or your usual contact) at the office.