Annual Investment Allowance raised permanently to £1m
Annual Investment Allowance raised permanently to £1m
21st October 2022
Against a backdrop of economic uncertainty, the Government’s announcement that it is to permanently raise the Annual Investment Allowance (AIA) to £1m comes as welcome news indeed. First introduced in 2008, the Annual Investment Allowance (AIA) is an initiative designed to encourage and stimulate economic growth by helping businesses purchase the plant and machinery they require. To date all extensions to the scheme have been temporary, but the announcement that AIA will be raised permanently to £1m from 1 April 2023 will allow businesses to make acquisitions as and when they require them, rather than in line with any time limitations imposed by the scheme.
Here's how the AIA scheme works:
What is it?
The AIA is a capital allowance which allows companies to deduct the full capital expenditure value of any qualifying items up to £1m from their pre-tax profit in the year of purchase. As such, AIA accelerates the tax relief which can be claimed on equipment purchased.
Who can benefit?
Any UK business, excluding partnerships where one of the partners is a company or another partnership.
Why does the scheme exist?
It's all about helping businesses invest and keeping them competitive in the market place while minimising the impact of purchases upon cashflow.
When can I apply?
Any time, but do be aware if you want to claim the full value, you must claim in the accounting period in which you purchased the item.
Next steps
If you are looking to purchase any qualifying assets, check lead times with your supplier as tax relief under the scheme is only available in the year of purchase. Should you require a tailored financial solution to enable you to acquire the assets you need, contact Scania Financial Services today – our team is on hand and ready to assist.
