The AIA is an incentive for businesses to invest in capital items as it allows for 100% tax relief for qualifying expenditure on plant and machinery. It can be claimed by individuals, partnerships, companies, UK non-residential property businesses or furnished holiday lets.
The AIA is available on most assets purchased, with the notable exception of cars.
During this period, it will allow businesses to claim £1m of tax relief in the year rather than the current £344,000 on main pool expenditure (£200,000 + £800,000*18%).
It is important to note that where a business has a chargeable accounting period spanning the date of the change, the available AIA must be computed by reference to the number of months falling before and after the date of the change. For example, if an accounting period ended on 30 June 2019, a company can claim AIA of £600,000 (£200,000 x 6/12 + £1m x 6/12). Please also note that the maximum amount of AIA available to be claimed in the period up to 31 December 2018 in this case is £200,000.
This is potentially a very beneficial additional relief, but given the above, businesses should consider the timing of relevant expenditure, such that the full benefit can be obtained from the increased allowance.
See our insights and facts for information about tax and stamp duty.
Gary Bloch FCCA
Managing Partner
For more information please contact Gary:
gary.bloch@fkgb.co.uk
050 578 9154
