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.
*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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