From 1st January 2019 (until 31 December 2020), the Annual Investment Allowance (AIA) will be increased from £200,000 to £1,000,000 as announced in the Autumn Budget 2018.
This means that businesses purchasing assets next year, such as plant and equipment, machines and tools, vans, lorries and diggers, will be able to claim tax relief in the year of purchase.
The AIA allows the total cost of plant or machinery purchases to be offset against your company’s taxable profit for the year. Effectively, this results in a saving on the cost of plant and machinery purchase of 19% at the current Corporation Tax rate.
The good news for businesses looking to expand or renew their assets is that they do not need to buy the assets outright and in most cases can hire purchase the assets and receive the full allowance.
Therefore, the increase in the AIA provides an attractive tax incentive for businesses to bring forward purchasing plans during this period of increased allowance.
Who can claim AIA?
The allowance is open to businesses whose activity includes trading, commercial property letting, office or employment or leasing. Mixed partnerships (partnerships comprised of both individuals and companies) and trustees are not eligible.
What can qualify for AIA?
Investments that could qualify include:
- Computers and office furniture and equipment
- Vans, lorries, trucks, cranes and diggers
- Integral features’ of a building or structure
- Other building fixtures, eg. shop fittings, kitchen & bathroom fittings
- All kinds of business machines, eg. printing presses, lathes & tooling machines
- Tractors, combine harvesters and other agricultural machinery
- Gaming machines, amusement park rides
- Computerised machinery, such as robotic machines
- Wind turbines and fibre optic cabling.
To take advantage of the AIA you may like to speak to you accountant to assist with your planning.
If you are considering purchasing assets under the AIA, The Funding Store can source a series of asset finance, secured and unsecured financing solutions.
Contact us 7 days a week to discuss how we can help you secure the finance you need for your purchase.
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This article has been produced by The Funding Store for general interest. No responsibility for loss occasioned to any person acting or refraining from action as a result of the information contained in this article is accepted by The Funding Store (MK) Limited. In all cases appropriate professional advice should be sought before making a decision.