The Annual Investment Allowance (AIA) allows businesses to invest in new qualifying plant and machinery whilst attracting a maximum 100% tax relief in the year of purchase.
In the 2014 budget, chancellor George Osborne announced both and increase of the allowance to £500,000 and and an extension to December 2015.
In recent years there have been a number of changes to the AIA limits so we though a quick recap might help:
- 6 April 2012 - 31 December 2012 £ 25,000
- 1 January 2013 - 31 Match 2014* £250,000
- 1 April 2014* - 31 Decmeber 2015 £500,000
- 1 January onwards (may well change) £ 25,000
*For Soletraders, partnerships and LLPs, the dates are 5 and 6th April 2014.
Planning the timing of capital expenditure is crutial to both tax planning and cashflow, our advice is to alwas talk with your accountant when making such decisions.
When financing the cost of qualifying machinery through Hire purchase, ensure its in use by the year end.
Expenditure on buildings does not qualify unless it comprises plant (see below). Ensure any such expenditure can be identified and allowances claimed.
A quick list of items that qualify, but by no means a complete list is: Common:
- Computers and printers.
- Office Equipment
- Plant and machinery.
- Electrical equipment. (TVs, radios, Vacuum cleaners etc)
- electrical systems, including lighting systems
- cold water systems
- space or water heating systems, powered systems of ventilation, air cooling or air purification, and any floor or ceiling comprised in such systems
- lifts, escalators, and moving walkways
- external solar shading