The Annual Investment Allowance (AIA) provides 100% relief up to a fixed annual limit for most expenditure on plant and machinery, instead of the normal capital allowance of 8% or 18% on a reducing balance basis.

The limit has varied a number of times considerably since the allowance was introduced in April 2008. It was initially £50,000, but was increased to £100,000 from April 2010.

From 1 April 2012 (for corporation tax purposes) or 6 April 2012 (for income tax purposes) it fell to £25,000.

However in the 2012 Autumn statement the Chancellor announced that it would be increased to £250,000 for expenditure incurred in the two-year period beginning on 1 January 2013 and ending on 31 December 2014.

This gives a significant incentive to bring forward expenditure that might otherwise have been incurred on or after 1 January 2015.

Please contact us if you require further information.