What is the Annual Investment Allowance?
A – The AIA is available on virtually all plant or machinery expenditure. It may be claimed on long-life assets, integral features and other special rate expenditure, as well as on general plant and machinery, and the taxpayer is free to allocate his AIA against any type of P&M expenditure in any way he chooses. It is to be expected that taxpayers will commonly allocate the AIA against the expenditure that would otherwise receive the lowest rate of capital allowance (generally 10% special rate expenditure). Up to £50,000 may be used in the year of purchase against taxable income. Any balance over the £50,000 limit is then added to the general pool of assets and the prevailing WDA applies.
