Annual Investment Allowance 2015 – 2016

Designed to increase investment in business, the Annual Investment Allowance (AIA) permits businesses to make large capital expenditure that is 100% tax deductible in the first year.

The budget announced in July 2015 revealed some major changes for businesses over the next year to the AIA reducing from £500,000 to £200,000 as of 1st January 2016.

This is not the first time with numerous changes to the AIA in recent years; increasing from £25,000 to £250,000 in 2013, before increasing to the current levels of £500,000 in 2014.

With the changes being made to AIA, any purchases made in 2016 will be subject to the new limits. Allowing for a transition period of January – March 2016 (where businesses year end dates fall on or before 31st March 2015) pro rata amounts up to £50,000 will be 100% tax deductible, but this is a significant drop from what would have previously been allowed (£125,000).

The key message to all businesses that wish to fully take advantage of the full £500,000 currently allowed is to make all purchases before 31st December 2015 before the lower threshold is introduced.

If you are planning on making significant equipment purchases between now and 31st March 2016, why not get in touch with our team of experts to see if your investment is tax deductible, and how it can impact your business now.

Call Harvey Telford & Bates Chartered Accountants on 01743 462604 or email [email protected] so we can provide guidance on your business accounting.