From 1 January 2013, the Annual Investment Allowance (AIA) increases to a maximum entitlement of £250,000 meaning businesses can claim up to this amount on the purchase of new assets.

This higher rate will be available until 1 Jan 2015 when it reverts to £25k and has been introduced to encourage investment in plant and machinery in a bid to aid the economic recovery. The AIA covers most asset purchases with the few exeptions including cars.

Care needs to be taken around when the assets are purchased and some businesses with a year end straddling the dates of increase and decrease (1 Jan 2013 and 1 Jan 2015) will need to pro-rate the maximum entitlement.

Essentially though this is good news for businesses who are looking to buy assets. Perhaps it is a good time to bring forward investment from 2015 and beyond to take advantage of this higher rate and reduce the tax bill.

Curo

Jan 2013

 .