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 1st 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 December 2021 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!

Avatar for Andy Green
About Andy Green

As Client Director Andy Green works primarily in delivering audit and assurance services, particularly in the Retail and Technology Sectors, as well as being the firm’s Compliance Director. These roles both bring great responsibility in ensuring that the outstanding quality and reputation of the firm is maintained.

After training and qualifying with a mid-tier firm of Chartered Accountants in the City, Andy spent some time in investment banking before joining THP in 2008, a move driven by his desire to get back into the profession. “The beauty of working for an accountancy practice is that every day is different – and you’re constantly achieving successes for your clients.” With Andy’s natural ability in interaction, THP is the ideal place.

With his positive drive and sense of humour Andy works with an array of clients, giving each the ultimate attention no matter what the size of their company.

Join The Conversation
ICAEW
Cyber Essentials Plus certification
Sign up for our Newsletter