In April 2014 the AIA increased to £500,000 from £250,000 so we would encourage any business to plan their capital investments if their spending is likely to be over £25,000.
There is a great deal of confusion but the tax relief is given against profits and so the tax saving depends on the income or corporation tax rates being paid in the year in which the capital investment is made.
The AIA provides a tax write-off against profits for expenditure incurred on qualifying plant and machinery (please note this is not available on cars). It is effectively a 100% up-front allowance in the year of purchase.
Please note though when you sell the plant and machinery in future you could pay tax on the income from the sale.
Building Allowances have been abolished, but there are allowances for structural investments.
AIA will decrease to £25,000 in January 2016 so it is vital any capital investments are carefully planned as timing of the expenditure is crucial.
For further information or to discuss your capital investments please contact us on 01386 552644 or 01531 631500.