Annual Investment Allowance – £1m limit extended until 31 March 2023

Buying plant or machinery? Make the most of your (now very generous) Annual Investment Allowance (AIA)

When you need to buy machinery (including vans) to use in your business, there’s a handy tax allowance that can help you reclaim some tax to offset part of the cost. Called the Annual Investment Allowance (AIA), it allows you to deduct part or all of the cost from your taxable business profit.

In the not too distant past, the amount of allowable AIA was pretty miserly, being limited to £25,000 of expenditure that you could deduct from your profits. Great if you wanted to buy say, a new van – but far less handy if you needed to buy ten.

But a few years ago Government woke up to the fact that such a low AIA limit was discouraging businesses from investing. So from April 2014 it temporarily lifted the amount you could claim to £500,000. This lasted until 1^st January 2016, when the level was reduced down again and set at £200,000. Then from 1 January 2019 they had another change of heart and this was increased back up to £1m.

This limit was to be revised back from £1m to £200,000 from 1 January 2021 but the £1m limit has recently been extended until 31 March 2023 so good news!

If you are wise, you’ll take advantage of this allowance by talking to one of our accountants, who will be able to advise you whether you have made expenditure that can be offset against profits using AIA. Not all types of Plant or Equipment qualify and we will help you to ensure that all your claims are presented in the best possible way to gain maximum benefit.

After all, when the taxman gives you a bit of extra wriggle room, it seems rude not to take advantage of it. Get in touch today if you’d like to learn more!