The Chancellor recently announced that the temporary increase in the Annual Investment Allowance (AIA) for expenditure on plant and machinery has been extended to 1 January 2022.
What is the Annual Investment Allowance?
The allowance enables firms to fully offset the cost of qualifying capital items of plant and machinery against taxable profits.
Since January 2019, businesses have received faster tax relief for plant and machinery investments up to £1 million. The tax relief was originally scheduled to revert to just £200,000 from 1 January 2021, but that will now be delayed by twelve months.
The extension is intended to increase confidence as many businesses look to weather the pandemic and plan for the future.
Finance Secretary to the Treasury Jesse Norman said:
“It is vital that we support businesses through the difficult months ahead. Extending the annual investment allowance’s £1m cap will give businesses the confidence they need to invest into next year, helping them to grow whilst benefitting the wider economy too.”
Tax relief on company car Benefits-in-Kind
Remember that there is currently an additional 100% tax relief for the cost of buying a new car for the business where the CO2 emissions of the car are no more than 50g per kilometre. That threshold reduces to 0g from April 2021.
If you’d like some discuss your options for company car Benefits-in-Kind (BiK), don’t hesitate to get in touch with us.
Get in touch if you’d like to discuss your AIA expenditure and how you can make the most of the extension.