A temporary increase in the Annual Investment Allowance (AIA) to £1 million announced in the Autumn Budget 2018 is now in effect. The new allowance – five times the previous cap – will benefit businesses investing from £200,000 up to £1 million in new plant and machinery.
The measure is designed to encourage businesses who may have held off buying new plant and machinery – particularly in the current climate of uncertainty – to feel more positive about investment decisions.
Annual Investment Allowance – Key benefits
The total cost of plant or machinery purchases can be offset against a company’s taxable profit for the year.
The AIA is not just for cash purchases; it can be utilised for assets purchased with hire purchase and loans.
What type of expenditure does the AIA cover?
The term ‘plant and machinery’ actually covers almost every type of asset purchased for business purposes, with the exception of land, buildings and cars.
Typical examples of plant or machinery include:
- Vans, lorries, trucks, forklifts, cranes, diggers and other construction plant
- Manufacturing machinery, waste/recycling equipment, garage equipment
- Computers and all kinds of office furniture and equipment
- Other building fixtures, such as shop fittings, security systems, industrial racking, kitchen and bathroom fittings
- All kinds of business machines such as lathes, tooling machines and printing presses
- Tractors, combine harvesters and other agricultural machinery
- Computerised/computer-aided machinery, including robotic machines
When is the best time to buy equipment?
The best time to make large capital purchases will depend on your company’s accounting periods and financial position.
Please get in touch if you would like to discuss your future plans to buy plant and equipment. We will also be happy to provide guidance on securing business funding, finance and grants in relation to capital investment. Contact one of our offices or complete the online form.