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Temporary increase of the AIA limit has been extended

A yearlong extension to the temporary increase of the Annual Investment Allowance (AIA) has recently been announced.  Instead of allowing the AIA to revert to £200,000 from 1 January 2021, the temporary £1 million cap is being extended until 31 December 2021.

AIA allows businesses to deduct the full value of qualifying assets from profits before tax.  The full tax relief is received in the year assets are purchased rather than over several years, therefore assisting cash flow.

This measure will provide significantly faster tax relief for qualifying investments up to £1 million, helping businesses to invest and grow.

The increase in AIA will apply to qualifying expenditure on equipment, machinery and other assets a business needs from 1 January 2019 until 31 December 2021 (dependent on a business’s chargeable period).

For more information on this allowance from HM Revenue & Customs, refer to their website: www.gov.uk

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