In January 2019 the Annual Investment Allowance AIA was increased from £200k to £1 million for a period of two years ending in January 2021. There was a proposed reduction in the Annual Investment Allowance (AIA) from £1M to £200k from 1 January 2021. The Government has announced that there will be an extension to the increase to 31 December 2021, in a move that will be welcomed by many businesses.
This ensures that companies around the nation will continue to claim up to £1M via the AIA for capital investments in plant and equipment facilities in the same-year tax relief. Corporations are entitled to deduct the full value of an item on pre-taxed income that qualifies for AIA. The government has taken the decision to ‘boost confidence as businesses look to survive the pandemic and prepare for the future’.
The extension of the temporary increase of the AIA to 1 January 2022 is a an added incentive, especially during this uncertain time, to help and promote firms and companies investing in plants and machinery. Businesses should budget their capital expenditure for the next year by extending the limit for a further duration to make use of the 100% tax relief available for qualified expenditure.
If you would like to discuss how the extension of the increase in Annual Investment Allowance could affect your business please get in touch with us.