The Annual Investment Allowance (AIA) 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 is a 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, for example:
- 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 purchase of:
- cars that are not working assets;
- items you owned for another reason before you started using them in your business; and
- items given to you or your business.