One of the flagship measures in the UK Chancellor of Exchequer’s 2014 Budget was to increase the level of Annual Investment Allowance (AIA) to £500,000 from April 2014.
AIA offers tax relief at 100% on Qualifying Expenditure in the year of purchase and is designed to encourage businesses to make capital investments in the knowledge that this will directly reduce the level of Corporation Tax due on their profits.
Most business structures are entitled to the AIA whether you are a Limited Company, sole trader or partnership.
Qualifying Expenditure is defined as ‘expenditure on the provision of Plant or Machinery wholly or partly for the purposes of a qualifying activity that the person incurring the expenditure carries on’.
Essentially, this means that the AIA is available on virtually all Plant or Machinery expenditure and Plant or Machinery covers almost all business assets an individual or company might buy.
The only business assets specifically excluded from the AIA are land, buildings and cars.
Some typical examples of Plant or Machinery that would qualify for the AIA include:
• computers and all kinds of office furniture and equipment
• vans, lorries, trucks, cranes and diggers
• ‘integral features’ of a building or structure
• other building fixtures, such as shop or gym fittings, kitchen and bathroom fittings
• all kinds of business machines, such as printing presses, lathes and tooling machines
• tractors, combine harvesters and other agricultural machinery
• gaming machines, amusement park rides
• computerised /computer aided machinery, including robotic machines
• wind turbines and fibre optic cabling.
This is not a comprehensive list and many other assets would be deemed to be Plant and Machinery and, thereby, entitled to the AIA.
If you are unsure as to whether your capital expenditure qualifies for the Annual Investment Allowance, please contact firstname.lastname@example.org for further information.