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 Accounting News & Insights

Annual Investment Allowance (AIA)

23rd June 2014

Annual Investment Allowance (from 2013):

Income tax:

 

 

 

 

Date

 

AIA available

 

01 Jan 13 - 05 Apr 14

 

£250,000

 

06 Apr 14 - 31 Dec 15

 

£500,000

 

01 Jan 16 onwards

 

£25,000

Corporation Tax:

 

 

 

 

Date

 

AIA available

 

01 Jan 13 - 31 Mar 14

 

£250,000

 

01 Apr 14 - 31 Dec 15

 

£500,000

 

01 Jan 16 onwards

 

£25,000

Annual Investment Allowance (AIA) offers businesses the opportunity to claim upfront a full deduction on its qualifying acquisitions instead of an annual deduction of 18% (or 8% for integral assets). For businesses subject to Corporation Tax, the maximum AIA was increased to £500,000 from 1 April 2014 to 31 December 2015. The table above summarises the maximum AIA for businesses subject to Corporation Tax and Income Tax.

From 1 January 2016, the maximum AIA reduces to £25,000. This may be some time away, but for some businesses - especially those planning to acquire high value assets or undertake substantial acquisitions to make use of the increased AIA - there are a number of issues that should be considered now.

Such issues include lead or delivery time of high value assets, accounting periods straddling 2015 and 2016, and acquisitions by a group of companies. Without appropriate planning and considering the wider issues affecting the acquisitions, businesses could be faced with a reduced AIA claim or in a worst case scenario, missing out on it entirely because the asset can only be delivered in 2016.

If you are unsure how your commercial decisions affect the tax position of your business, we can improve your understanding and help you plan out your acquisition strategy to maximize the tax relief available to you. Please contact Keng.Cheong.wardwilliams.co.uk if you would like to discuss the above.

 

 

 


Accounting News & Insights

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