Annual Investment Allowance £1m cap extended

The Treasury has extended the Annual Investment Allowance (AIA) for an extra year. This is designed to offset the current economic downturn.

The extension of the temporary £1m cap was due to return to £200,000 on the 1st January 2021, but will now reman in place until 1st January 2022.

This means businesses can continue to claim up to £1m in same-year tax relief through the AIA for capital investments in plant and machinery assets throughout the period.

The extension is particularly good news in situations where Coronavirus and continued Brexit negotiations may have delayed significant investments.

Accounting industry experts are pleased that the announcement has been made, but have called for an end to what they call ‘short term measures’ and for ‘a comprehensive government strategy which provides greater certainty for longer term investment planning’.

If you’re planning a significant investment, speak to us before you go ahead to ensure that you’re not missing anything in terms of finance or tax implications.

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