Legislation was introduced in Finance Bill 2013 to increase the maximum amount of the annual investment allowance (AIA) from £25,000 to £250,000 for a temporary period of two years from 1 January 2013. Businesses likely to be affected are those investing more than £25,000 a year in plant or machinery from 1 January 2013.
With effect from 1 April 2012 (CT) or 6 April 2012 (IT) the maximum amount of the AIA had been reduced to £25,000 for qualifying expenditure incurred on or after those dates. However, the new measure taken effect from 1 January 2013 allows a maximum amount of AIA of £250,000 for all businesses (whether within the charge to corporation tax (CT) or within the charge to income tax (IT)) for a period of two years.
If you have been considering spending a substantial amount of money on acquiring new assets then now is the time to do so as capital expenditure up to the maximum of £250,000 can be offset against your taxable profits.
Certain rules apply for accounting periods spanning the date of change. Please contact us if you would like any further information.