The Annual Investment Allowance (“AIA”) for capital expenditure had been due to revert to £200,000 per annum on 1 January 2021 following a two-year period of being temporarily increased to £1 million p.a for all types of business. The government has however recently announced an early Christmas present for businesses with the news that the AIA limit of £1 million will be extended for a further year until 1 January 2022 in a bid to stimulate investment.
The AIA essentially gives a business 100% first year tax relief for expenditure on plant and machinery. If the AIA limit is exceeded then a writing down allowance of 18% or 6% is available on the balance of expenditure on a reducing balance basis. Broadly, groups of companies or companies under common control are only entitled to one AIA between them although it can be split in the best interest of the business.
The AIA is available for expenditure on most plant and machinery, the primary exception being expenditure on cars.
It is currently expected that the AIA limit will return to £200,000 from 1 January 2022.
Our Current working arrangement – We remain ‘Open for business’
Our staff are continuing with office based working on a rota basis, each attending up to two days a week, whilst continuing to work from home at other times. They can still be contacted in the usual way either via email or by calling the office number where reception will divert your call to the appropriate staff member.
Should you have any questions regarding the AIA extension outlined above, and the type of expenditure which qualifies for capital allowances, please speak to your usual contact at the firm.
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