Annual Investment Allowance Limit Extension

The Annual Investment Allowance (AIA) gives businesses the opportunity to claim 100% capital allowances in the year of expenditure on qualifying capital assets.

£1 million annual investment allowance extended to 1 January 2022

From 1 January 2019 the 100% AIA amount for expenditure on plant and machinery was temporarily increased from £200,000 to £1 million with the measure due to be reversed from 1 January 2021. However, it was announced by the government on 12 November 2020 that the expiry date for the £1 million annual allowance will be extended by a further year to 1 January 2022.

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This measure has been put in place to stimulate business investment in UK manufacturing and give upfront support to businesses during continuing COVID-related uncertainty. Despite the measure being primarily aimed at the manufacturing sector, it is welcome news for businesses in all sectors that are looking to invest in plant and machinery.

By extending the limit for a further year, businesses can plan their capital expenditure over the next year to maximise the 100% tax relief available for qualifying expenditure. Planning will also need to be considered for periods straddling the 1 January 2022 reduction to £200,000 will face an apportioned AIA limit for expenditure made post 1 January 2022, so expenditure should be made before this date where possible.

If you are expecting to incur expenditure on plant and machinery or are carrying out any refurbishment/fit out works, Please complete the below form so that we can help you maximise your claim:

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