Temporary Annual Investment Allowance Made Permanent

Written by Chris Barlow

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November 30, 2022

The government has decided to make the £1,000,000 limit for the Annual Investment Allowance permanent, eliminating plans to reduce it to £200,000 in April 2023.

The Annual Investment Allowance (AIA) means that businesses can claim capital allowances on items that they use to stay in business. Items such as these are referred to as ‘plant and machinery’, and the AIA gives a 100% write off on certain items up to a set limit, every 12-month period. The limit for this has been £1,000,000, but the government had scheduled for it to be reduced to £200,000 in April 2023. However, the government has now announced that the £1,000,000 limit will instead become permanent. AIA can be claimed on plant and machinery, not including:

  • Business cars
  • Items you owned for another reason before you started using them in your business 
  • Items given to you or your business. 

Up to and including the 31st of March 2023, you may be able to claim the super-deduction allowance and the 50% special rate first year allowance (SR allowance), if your plant and machinery is new and unused. These allowances are only available for incorporated businesses. The super-deduction allows you to deduct up to 130% of the cost for plant and machinery from your profits before tax, while the SR allowance lets you deduct 50% of the cost from your profits before tax. 

If you would like any further clarification on capital allowances for your business, please do not hesitate to get in touch with Chris Barlow:

[email protected]

+44 (0) 1 942 816 512

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