Annual investment allowance

Up to £1m tax break for investment in qualifying assets

The Chancellor picked out investment as his preferred give-away to the business sector in his Autumn Budget 2018.

The Annual Investment Allowance is being increased from 1 January 2019, to £1m from the present base level set some years ago of £200,000. 

The increase is due to be available for two years, until 31 December 2020. 

At this later date the AIA will presumably return to the £200,000 limit.

The AIA allows for the 100% write down of qualifying asset purchases against business profits. For profitable companies, partnerships (excluding partnerships where one of the partners is a company or another partnership) and sole traders this is a generous tax break.

The AIA is available for most plant and equipment purchases.

These include:

• items that you keep using in your business, including commercial vehicles and cars if they are working assets, for example taxi cabs or driving school, dual control vehicles;
• costs of demolishing plant and machinery;
• parts of a building considered integral, known as ‘integral features’;
• some fixtures e.g. fitted kitchens or bathroom suites;
• alterations to a building to install other plant and machinery - this doesn’t include repairs.

The AIA is not available for purchases of:

• cars that are not working assets;
• items given to you or your business.
• items you owned for another reason before you started using them in your business.