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Following the release of the Autumn Budget 2018, the Annual Investment Allowance (AIA) will temporarily increase from £200,000 to £1,000,000 for purchases of plant machinery. Due to take effect in the New Year for a two-year period, Glaston takes a look at what this change will mean for our customers.
The AIA is a government incentive that allows businesses to write off 100% of qualifying capital expenditure up to a set limit against taxable profits for the same period. It was introduced in 2008 and the limit has seen some dramatic changes over the years – fluctuating between £50,000 and £200,000.
The increase to £1,000,000 between 1st January 2019 and 31st December 2020 provides the highest Annual Investment Allowance ever set, and is a perfect window of opportunity for new and existing Glaston customers.
Businesses that qualify for the AIA have a new allowance for each accounting period. You can only claim for machinery that was purchased within that same accounting period. For the purposes of the claim, the date of purchase is considered to be either a) the date you signed the contract for the item, with the payment due within less than four months, or b) when payment is due, if due more than four months later.
The Annual Investment Allowance can be utilised by all companies, individuals and partnerships where the members are individuals. As long as the sole trader, partnership, business or self employed person is liable for Corporation Tax, they can claim AIA.
AIA helps boost the cash flow of a business. It accelerates the tax relief available in a business, because it can be claimed in the year an investment is made. This means that businesses do not have to claim over a number of years, and instead can benefit straight away.
When the increased limit comes into place on 1st January, you will have the opportunity to invest in a higher grade of compressed air or nitrogen generation equipment, or a larger scale system to upgrade your existing supply.
Businesses will be able to invest in compressed air or nitrogen generation, without cutting back on specification or controller equipment. This means that your business could benefit from higher quality equipment and more accurate testing, maintenance and monitoring software to ensure the most efficient results.
The January 2019 – December 2020 window of opportunity will soon open, allowing your business to benefit from an investment allowance of up to £1,000,000. To discuss the options for compressed air equipment and nitrogen generation machinery for your business, contact an expert engineer at Glaston today on 01695 51010.