The Annual Investment Allowance (AIA) provides a 100% upfront deduction against
taxable profit for the cost of qualifying plant and machinery purchased by a
business up to an annual limit. AIA is a
valuable tax relief as usually the cost of a capital asset is spread over a
number of years for tax purposes.
From 1 January 2013 the Annual Investment Allowance increased significantly
from £25,000 to £250,000 for a temporary period of 2 years. This is a welcome change for businesses of
all sizes.
This change to the AIA combined with the previous change made in 2012,
where AIA decreased from £100,000 to £25,000, means that there are some complex
computation rules for calculating the AIA available for year ends finishing
before 31 December 2013 and particularly for those with year ends of 31 January
and 28 February 2013. In some cases it
may be worth deferring expenditure until after the year end in order to take
advantage of the full £250,000 increased limit.
For further advice and guidance on how to maximise, calculate and claim
AIA contact Sarah Brock on 01932 830 664 or email sarah.brock@wardwilliams.co.uk
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