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Annual Investment Allowance explained: Tax relief for small businesses

The Annual Investment Allowance (AIA) is a form of tax relief that allows businesses to claim 100% of expenditure on specific categories of machinery and plants. The allowance is intended to encourage small to medium-sized businesses to invest, with a vision to stimulate growth in the UK economy.


What has changed?

The government has recently made a sizeable increase to the claim allowance, from £200,000 to £1,000,000 for the next two years. There have been many changes to the AIA since its introduction in 2008 but this is the most significant.

This large increase is designed to encourage your business to invest in the equipment that will help you grow. At Tax Agility, we have a team of specialised accountants for small business with years of experience in helping businesses to grow. We’re here to help you understand how your business can make the most of 2019, starting with your AIA claims.

Changes to the AIA

What can be claimed?

You can claim on ‘plant and machinery’ used in the course of your business. This can include computers, telecommunication and surveillance systems, safes, fire alarms and burglar alarm systems.

How does it work?

If you purchase ‘plant or machinery’ that qualifies, you can deduct the cost of that asset from your business’ profits before calculating tax on your profit.

For example, if you bought a £2,000 computer for your business and your annual profits came to £55,000, you would only pay tax on £53,000. (£55,000 – £2,000 = £53,000)

Get help from tax accountants

Take advantage of this new increased allowance and don’t miss out on other forms of tax relief. At Tax Agility, our small business accountants are happy to discuss tax relief with you.

Apart from tax relief, you may also be interested in:

Get in touch on 020 8108 0090 or use our Online Form.

This blog is a general summary. It should not replace professional advice tailored to your specific circumstances.

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