Annual Investment Allowance is a scheme for business tax payers – companies, partnerships and sole traders – to offset capital expenditure on plant and equipment – but not cars – against tax. The thresholds have a history of changing in recent years.
As a reminder, AIA was temporarily increased to £1,000,000 from 1 January 2019 for two years. Transitional rules apply where years fall outside the two-year window, so for December year ends these transitional rules had no real impact.
30 June year ends will benefit from the full 100% relief of £1m for the financial year starting 1 July 2019.
For June year ends the transitional rules would have the following impact on the maximum allowance that a business can claim:
Year end 30 June 2019
£1m x 6/12 plus original allowance £200,000 x 6/12 = £600,000
Year end 30 June 2020
Year end 30 June 2021
£1m x 6/12 plus reversion back to the original allowance £200,000 x 6/12 = £600,000
Article from ACCA In Practice