The Annual Investment Allowance (AIA) is available for most businesses and partnerships in the UK. Businesses can claim AIA for capital expenditure incurred on the majority of plant and machinery items.
In an effort from the Government to provide more tax aid to businesses, Chancellor George Osborne has doubled the maximum tax benefits threshold to £500,000 until December 2015.
“I want to do something today that helps all businesses invest,” said Osborne.
“In 2012, I increased the Annual Investment Allowance ten-fold to £250,000. This generous allowance was due to expire at the end of this year – and all the business groups have urged me to extend it. So we will; but we’ll do more.
“We’re going to double the Investment Allowance to £500,000, extend it to the end of 2015, and start it next month.
“99.8 per cent of businesses will receive a 100 per cent investment allowance. It costs £2 billion in the short term – so when we say: we’re going to get Britain investing; when we say we’re going to back growth around the country – we mean it.”
The AIA offers 100 per cent tax relief on qualifying expenditure on plant and machinery items within the same year of purchase. This pro-rates for short and long periods, and also for periods spanning the operative dates and rates of allowance.
Mr Osborne also confirmed in his Budget 2014 speech that the Government was backing social enterprises by setting the rate of income tax relief for social investment at 30 per cent from 6th April 2014, putting social enterprise tax relief in line with VCTs and EICs.
Nick O’Donohoe, chief executive of Big Society Capital, the world’s first social investment bank, said: “The Chancellor has today given a very welcome pledge to set the rate of social investment tax relief at a level that we believe will encourage more investors to put more money into social enterprises.”
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