Annual Investment Allowance - What's in it for your business?

The Government announced in the Budget that the AIA or 'Annual Investment Allowance' will be falling to £200,000 as of 1 January 2016 from a generous half a million in the current year.

We view this as a positive announcement for businesses and believe it will put a stop to 'panic buying' businesses looking to make use of the allowance before it's taken away. 

Any plant and machinery expenditure covered by 'AIA' gives a full deduction against profits whether you are Self Employed, a Limited company or Partnership. Anything after this, will be claimed under capital allowances as a yearly deduction (currently 18 or 8%).  

The 'AIA' Allowance includes business expenditure such as; 

  • Fire Alarm and CCTV units
  • Computer Hardware
  • Vans used in business (Not cars) 
  • Alterations to a building to install plant & machinery
  • Electric shutters (not manually operated)
  • Moveable flooring & walls
  • Fitted Kitchens & Bathroom Suites
  • Integral Features - Lifts, Stairs, Air conditioning and air cooling systems
  • Hot and cold water systems but not toilet and kitchen facilities
  • Electric systems including lighting systems

Examples of non-qualifying expenditure for 'AIA' include;

  • Cars
  • Anything on lease
  • Buildings including doors, doors, manual shutters, walls & floors
  • Mains water & gas

This is not an exhaustive list. Please contact us for a more detailed list. 

For a majority of businesses, it is rare that large amounts are spent on plant and machinery, but nevertheless being aware of the type of expenditure can be offset against profits may influence important business decisions.

We would always recommend you seek professional advice when considering timing of business purchases considered a large amount. 

The 'First Year Allowance' is also available in addition to the 'AIA' for some energy efficient expenditure. 

For further information on purchases for your businesses, contact Brian or Caroline on 0845 303 1144 for a chat or email to see how we can help you raise your game. 

Cooper Curtis Accountants have offices in Warwickshire, Birmingham and Manchester

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Please note, all our content is for general guideline only, every case is different and we would recommend speaking to us before taking any action as a result of the content. The content was correct at the time it was published.