Annual Investment Allowance Increased27/04/2010

Most businesses are able to claim an Annual Investment Allowance (AIA) on the first £50,000 spent on plant and machinery. This provides immediate 100% tax relief on qualifying expenditure.

The allowance has increased to £100,000 from 1 April 2010 for a business within the charge to corporation tax and from 6 April 2010 for a business within the charge to income tax.

As the chargeable accounting periods of many businesses will span the operative date of change, a pro rata calculation of their maximum entitlement will be required. For example, if a company has an accounting year end of 30 September 2010, its limit will be £75,000. However, not more than £50,000 of the expenditure must be incurred prior to 31 March 2010.

The allowance is only available for assets used within your business and not if you hire out or lease the asset.

Please do contact us if you would like advice on how this increased allowance will affect your business.