Here’s a thought: why is the government so fond of acronyms and initialisms when it comes to tax law?

Capital allowances in particular are rife with confusing acronyms. WDA, FYA, SPA, ECA, BPRA*… the list goes on.

One we often get asked about is AIA: the Annual Investment Allowance.

What is AIA?

AIA provides qualifying businesses and partnerships with 100% tax relief on plant and machinery expenditure in the year of purchase. You can currently claim tax relief on up to £500,000 worth of plant and machinery expenses but only until 31 December 2015 – after which the maximum limit will drop back to £25,000.

Who can claim?

In order to be eligible for AIA, you must be one of the following:

  • A sole trader
  • A partnership where all members are individuals
  • A company
  • An employee (if you provide your own equipment).

Trusts and mixed partnerships made up of companies and individuals are not eligible for the allowance.

When can I claim it?

You can claim AIA on most plant or machinery purchases, provided it is used for your business. Examples of plant and machinery expenditure include:

  • Office equipment
  • Agricultural machinery
  • Vans, trucks and lorries
  • Machines used for business.

However, not all plant and machinery purchases qualify for AIA:

  • Cars, buildings and land
  • Plant and machinery that was gifted to your business
  • Expenditure incurred in an accounting period when your business stopped trading
  • Plant and machinery used under a long funding lease.

We’re here to help

PKB accountants and business advisers are here to help you Aspire for success, Achieve your goals and Enjoy the journey.

Contact us at info@pkb.co.uk or call 01344 776225 to find out how we can help with AIA and other capital allowances.

*writing down allowances, first-year allowances, small pools allowance, enhanced capital allowances, business premises renovation allowance – in case you were wondering.


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