In the Autumn Statement, the Chancellor announced a tenfold increase in the amount of Annual Investment Allowance (AIA) available to £250,000 for a two year period. After 1 January 2015 the AIA reduces to £25,000 again.
The AIA provides a tax write-off against profits for expenditure incurred on plant and machinery. It is not available for expenditure on cars.
If your business has an accounting period that spans the changes, the maximum AIA will need to be calculated.
For example, a 30 June 2013 year end would have a maximum AIA available of £137,500. But the date the money is spent will determine the actual AIA available.
The increase in AIA is clearly positive for farmers, however, careful planning is required.