In July of this year, The Chancellor announced in his Summer Budget that the Annual Investment Allowance (AIA), a tax incentive to promote business investment, would be set permanently at £200,000 from January 1st 2016. If you’re planning to make a business equipment purchase, purchasing now will ensure you get the most out of the current allowance limit.
What is the Annual Investment Allowance?
The Annual Investment Allowance is a type of capital allowance that offers a 100% deduction of qualifying expenditure from business profits. The allowance helps to reduce tax liabilities in order to encourage business growth.
What expenditure can be claimed on?
Most assets purchased for business use will qualify as expenditure, these could include:
- Office furniture and equipment
- Vans, lorries and equipment
- Building fixtures
- Business machines
- Agricultural machinery
- Computer software
However, the following items cannot be claimed on:
- Items you owned prior to starting your business
- Items gifted to you / your business
Who can claim?
All businesses can claim AIA, except mixed partnerships.
Can I claim on leased assets?
The AIA can be claimed on items brought via hire purchase with the intent of eventual ownership. This means that you can claim relief whilst also sharing out the cost of the purchase, as the allowance is paid out in full. Tax relief is also available on interest charged to the profit and loss account.
LDF offers a variety of finance solutions designed to help the process of purchasing or leasing assets as straightforward as possible. Over the years, we have greatly increased our appetite and capacity to help finance business assets.
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