£1 million Annual Investment Allowance extended to 1 January 2022

Annual investment allowance (“AIA”) is used by businesses to claim 100% tax relief on their plant and machinery in the year of purchase.

It’s an extremely valuable relief for businesses and the limit on the amount of spend covered by AIA was increased by the government from £200,000 to £1 million on 1 January 2019 for a temporary two year period to encourage investment.

The AIA was scheduled to reduce back down to £200,000 with effect from 1 January 2021, but with what has been an extremely difficult year for business, there was speculation on whether the increase would be extended to help stimulate the economy further during the recovery from Covid-19.

We are delighted that the government has confirmed that the £1 million AIA cap will be extended throughout 2021 in a move to boost confidence as companies look to weather the pandemic and plan for the future.

The government has stated that the cost of this should be covered by clamping down on tax avoidance.

This is good news for North East businesses – especially in the manufacturing and engineering sectors.

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For further advice, please contact us at advice@taitwalker.co.uk.