The Annual Investment Allowance (AIA) was introduced as a tax incentive to promote investment. It enables businesses to claim a 100% tax deduction for eligible capital expenditure, where the expenditure would otherwise only be entitled to relief at 18% or 6% per annum. The AIA annual expenditure limit is currently set at £1,000,000 but will fall to an annual limit of £200,000 from 1 January 2022.
The AIA can be claimed by both incorporated and unincorporated businesses. Partnerships where not all the partners are individuals are unable to claim AIA. It can generally be claimed against the cost of most types of plant and machinery (not cars), including fixtures and fittings.
For more details on the AIA, please download our free Comment On here.