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Annual Investment Allowance (AIA)

Annual Investment Allowance (AIA)

What Is the Annual Investment Allowance (AIA)?

The Annual Investment Allowance (AIA) is a form of tax relief for British businesses that is designated for the purchase of business equipment. The AIA allows a business to deduct the total amount of qualifying capital expenditure up to a certain limit from its taxable profits in a given tax year. This allowance is reserved for the purchase of business equipment, basically devices and machinery.

Understanding Annual Investment Allowance (AIA)

The Annual Investment Allowance (AIA) was acquainted in 2008 with urge businesses to invest in plant and machinery to animate economic growth. One of the primary incentives of the allowance is that it works with quicker tax relief since the full expenditure might be guaranteed in the extended period of purchase, as opposed to over a number of years.

Qualification for the AIA

The allowance might be guaranteed by companies as well as by sole proprietors. Partnerships are likewise qualified for the AIA, given that partners are individuals. A sole owner or member of a partnership with more than one business is normally eligible for the Annual Investment Allowance for every business, except if the businesses are worked on similar premises or potentially conduct comparative activities. In occasions where a similar person is in control of at least two limited companies, these companies are simply qualified for one AIA among them, and may pick how to designate this allowance.

Changes to the Amount of the AIA

Since its commencement, the levels of expenditure which might be guaranteed under the AIA have gone through a number of changes. The expenditure amount was brought to \u00a3100,000 up in 2010 from \u00a350,000 in 2008. From April to December of 2012, it was diminished to \u00a325,000, after which it was consequently brought again up in January 2013 to a level of \u00a3250,000.

From April 2014, a transitory measure was presented that multiplied the previous amount to \u00a3500,000 until December 2015. The aim was that following this period, the level would return to its previous low point of \u00a325,000. Nonetheless, in July 2015, the U.K. government announced that the AIA would be set at a level of \u00a3200,000 and in January 2019 it was set briefly to \u00a31,000,000 for the next two years.

Capital Expenditure That Qualifies for the AIA

Most assets purchased for business purposes can be guaranteed as qualifying expenses for AIA, with the primary categories as listed below:

  • Office equipment including computer hardware and certain types of software, and office furniture
  • Parts of a building alluded to as vital highlights
  • Certain fixtures, for example, air molding, fitted kitchens, or washroom fittings
  • Trucks or vans utilized for the end goal of moving
  • Machines utilized for business purposes
  • Agricultural machinery including farm trucks
  • Machines utilized for giving diversion, for example, arcade game machines

Assets that can't be guaranteed incorporate buildings, cars, land or designs like extensions or docks, and things utilized solely for business diversion. Part of the cost of cars utilized for business purposes can be deducted, however not as a part of the AIA . The exception to this rule on cars is the cars utilized by driving schools, which must be adjusted to have dual control, and as such might be guaranteed through AIA.

HM Revenue and Customs (HMRC) offers itemized guidance on claiming the Annual Investment Allowance with the Capital Allowances for Plant and Machinery Toolkit.


  • The AIA can be guaranteed by sole owners, corporations, and partnerships.
  • Most assets purchased for business purposes meets all requirements for the AIA.
  • The Annual Investment Allowance (AIA) is a tax relief scheme for British businesses that is designated for the purchase of business equipment.