Government announces extension to the £1m AIAby equipmentconnect
Now confirmed by the Treasury, the Annual Investment Allowance ("AIA") will remain at £1m until the end of 2021, rather than reverting to just £200k at the beginning of January as planned.
In a statement welcomed across the business community, Jesse Norman, the Financial Secretary to the Treasury, confirmed the plans as a commitment to stimulating investment. The move is likely to set the tone for upcoming policy designed to bolster investment in 2021, with significant capital spending projects already announced by Number 10.
The AIA allows businesses to offset 100% of the cost of qualifying plant and machinery investment against taxable profits in the year of purchase. The extension of the higher limit means that investments of up to £1m can continue to be offset against profits in the same period, rather than seeing the tax relief over a far longer time frame.
In addition to outright purchases, the AIA may be available on qualifying items bought on finance, typically including under Hire Purchase agreements. Our experts here at Equipment Connect are always happy to assist with any questions on equipment investment and funding options - get in touch!
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Specific tax and accounting advice should be sought in relation to the use of capital allowances and the AIA.