The Annual Investment Allowance (AIA) accelerates tax relief on plant and machinery expenditure.
It currently provides tax relief in the same year for the first £100,000 of expenditure, rather than spreading the tax relief across the ownership of the asset.
Prior to the last general election, the Conservative Party manifesto stated that a Conservative government would abolish the AIA.
The NFU argued that this allowance was extremely important to businesses with high levels of expenditure on plant and machinery, such as those in the agricultural industry.
In his June 2010 Emergency Budget, the Chancellor of the Exchequer instead announced that the level of the AIA would be reduced to £25,000 from April 2012.
The NFU has continued to lobby against this proposed reduction.
While the proposed change is due to take effect from April 2012, businesses with an accounting period spanning the 5 April 2012 (or 1 April 2012 for companies) will suffer a reduced AIA in that accounting period.
To maximise your use of the AIA it is important to understand when your expenditure is deemed to have been made and to time your expenditure so that it falls in the right period. Further information on these rules can be obtained from NFU CallFirst on 0870 845 8458.
If you are planning to make a significant investment in plant and machinery we would recommend that you discuss your plans with your professional advisers as soon as possible.
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