The UK Government has announced that planned reduction to the amount of relief available under the Annual Investment Allowance (AIA) will be delayed. The AIA is a tax incentive for businesses to promote investment. Generally, it can be claimed against most types of plant and machinery (but not cars), including fixtures and fittings. The relief enables businesses to claim a 100% tax deduction for eligible expenditure.
The current amount of relief, set at £1,000,000, is a temporary measure which was scheduled to revert back to £200,000 from 1 January 2021. This has now been delayed until 1 January 2022, to encourage investment following the COVID pandemic. Businesses can therefore continue to claim up to £1 million in immediate tax relief for capital investments (such as for plant and machinery).
This extension will be welcome to businesses that are looking to invest in plant and equipment.