Time running out to take advantage of the Annual Investment Allowance

Perhaps the fact that the temporary increase to £250,000 of the Annual Investment Allowance (‘AIA’) was announced ‘only’ in the 2012 Autumn Statement is what accounts for poor awareness of the tax relief. Had it been heralded in the main Budget which generally receives more attention, take up of the ability to claim increase capital allowances might have been more enthusiastic.

Either way, the ability to write off 100% of qualifying asset expenditure up to £250,000 is in place for the’ temporary increase’ period from January 2013 until December 2014 and it is not currently known what will happen to the relief after this date.

The AIA is can be claimed on a company’s new asset investment, which includes new or used plant and machinery. Items such as cars and land & buildings do not qualify for the AIA. Chancellor George Osborne had hoped that the unexpectedly large increase up from £25,000 would help kick-start investment by businesses, giving a boost to the order books of manufacturers and suppliers.

A number of our clients have made the decision to bring forward some of their capital investment so that they can claim as much of the available relief as possible. It is worth noting that there are special rules governing how much of the AIA is available when the accounting period does not fall wholly within the ‘temporary increase’ period.

Comments Julia Whelan, Curo’s head of tax “The Chancellor has given no hints about what is likely to happen to the AIA after December 2014 and so we would urge businesses, where possible, to bring forward expenditure to maximise their claims. Of course, funds need to be available in order to purchase assets in the first place and we are now seeing increased activity in raising finance for many sectors which is encouraging for business in the round.”

To discuss the AIA in more detail and how it could benefit your business, contact [email protected]..