27 Oct 2021 5:14 PM

The changes announced

In November 2020, amid the Covid crisis and announcements for support, the annual investment allowance temporarily increased limit of £1 million was extended to include spending up to 31 December 2021.

Today, in the Chancellor’s budget, he announced a further extension of the temporary limit to include spending from 1 January 2022 through to 31 March 2023.

The normal permanent allowance limit is £200,000 per annum which was effective from January 2016, but the higher temporary limit has been in place since January 2019.

What is the annual investment allowance?

The annual investment allowance (“AIA”) is a 100% capital allowance for qualifying expenditure on plant and machinery up to the specified annual limit.

Examples of spending that might be relieved by the AIA includes spending on vans or trucks, office or computer equipment, machinery and integral features of a building.

The AIA is particularly important for those businesses who are spending on assets and equipment that would not qualify for the super deduction of 130% that was introduced in March 2021 by the Chancellor, such as second-hand assets.

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