CKLG BLOG

AIA Update: Annual Investment Allowance Reduction from January 2021 now extended until 31 December 2021 

16.11.2020

Business

AIA Update: Annual Investment Allowance Reduction from January 2021 now extended until 31 December 2021 

The Annual Investment Allowance (AIA) temporary increase has been extended until 31 December 2021 for qualifying plant and machinery expenditure.  Originally it was due to fall from 1 January 2021 to £200,000.

The 100% AIA was increased to £1,000,000 on 1 January 2019 and will now apply until 31 December 2021.

The AIA may return to £200,000 on 1 January 2022. 

• As a reminder, the AIA allows a 100% deduction for qualifying plant and machinery expenditure upto the AIA limit incurred in a company or group of companies.
• Above the AIA, the usual capital allowances writing down allowances of 18% and 6% apply.

This is good news for anyone planning to incur significant expenditure on plant and machinery early in 2021, where otherwise the upfront tax relief could have dropped considerably.