Tax Tip: Is Annual Investment Allowance (AIA) Right For You?

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Working out your accounting calendar takes a bit of doing, especially if you’re looking to make the most of reliefs, benefits, and allowable expenses. The Annual Investment Allowance (AIA), which is available for claims on new plant and machinery can give a 100% deduction against profits (up to the amount of the allowance), and until 31 March 2023 the limit is £1 million – but after this, it will revert back to its permanent level of £200,000.

But applying the AIA isn’t always the right choice for your business – some companies may have the option of claiming the super-deduction for expenditure that fell between 1 April 2021 – 31 March 2023, which could allow for up to 130% deductions instead of AIA’s 100% rate; but to qualify the expenses must be incurred in the period 1 April 2021 – 31 March 2023, and isn’t available to unincorporated businesses (such as sole traders or partnerships).

Working out when to spend, and when to claim, could make the difference between deducting the full cost, or only up to £200,000 using AIA. Our experts are here to help you determine what reliefs and timings are the best for your business, and can potentially help you legally reduce your tax bill. Get in touch today by booking a consultation – and let us show you why Yorkshire Accountancy should be Your Accountancy.

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