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AIA £1m increase to be retained
The annual investment allowance (AIA) threshold has for some time been set at £200,00, with a temporary increase in the threshold announced annually to support businesses for usually the next 12 months.
Finally, the Chancellor has announced that the increase to £1 million will be retained on a permanent basis, which allows businesses to plan their investment spending rather than never being sure if the annual investment allowance will be available in the following year.
The AIA provides 100% tax relief through capital allowances for qualifying plant and machinery up to the specified annual limit, now announced to stay at £1 million. At this level it covers the level of spend for most businesses and allows them to invest in new capital equipment for example rather than repairing old equipment without losing out on the tax relief for cash spent. For growing businesses, this form of tax relief is often essential to allow growth while maintaining cashflow and working capital requirements.
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