Annual Investment Allowance (AIA) is a UK tax incentive that allows you to deduct the full value of qualifying assets from your taxable profits, within the year the expenditure was incurred, up to the limit of £1,000,000.
Good to know: If you purchase a new business asset, claim the relief and later decide to sell it, you will be liable to tax on any given gain on the asset.
What does the Annual Investment Allowance cover?
- Computers and office equipment
- Vans, lorries, trucks, cranes and diggers
- Integral building features (e.g. electrical or water system)
- Other building fixtures (e.g. shop, kitchen fittings)
- Business machines (e.g. printing presses, tooling machines)
- Tractors, combine harvesters and other agriculture machinery
- Gaming machines and amusement park rides
- Computerised/ computer aided machinery, including robotic machines
- Wind turbines and fibre optic cabling
What does the Annual Investment Allowance not cover?
- Cars
- Items owned before you started using them in your business
- Items given to you or your business as a gift
When can you claim relief?
You can only claim AIA in the period that you bought the item. The date you bought it is:
- When you sign the contract, if payment is due within less than 4 months
- When payments due, if its more than 4 months later
Good to know: If you buy something under a hire purchase, you can claim for the payments you have not yet made when you start using them. You cannot claim on the interest payments or charges. Also, if your business closes, you cannot claim AIA for items bought in the final accounting period.
At Moorgate Finance we’re always here to help you with your business finance. Apply here for a call back from one of our specialised Account Managers.