Annual Investment Allowance (AIA)

The AIA scheme allows you to deduct the full value of a qualifying item from your profits before tax.

You can claim up to £1 million of tax relief under the AIA scheme so it is well worth utilising! 

It’s worth noting that if you are a new business, this amount is apportioned for your accounting period:

e.g. If your accounting period is only 9 months long, the AIA will be 9/12 x £1m = £750,000

What are the qualifying assets for AIA?

In short, the AIA scheme is designed to provide tax relief on items you have purchased that are intended to have a lasting benefit for your business (capital expenditure).

However, only certain expenditure is recognised by HMRC as qualifying capital expenditure. Here is a non-exhaustive list we have compiled which are recognised by HMRC under the AIA scheme:

1. Plant and Machinery:

• Office equipment (e.g., desks, chairs, computers)

• Tools and machinery

• Vehicles (excluding cars)

• Storage systems (e.g., shelving, containers)

• Ladders, drills, and other industrial equipment

2. Fixtures and Fittings:

• Air conditioning and heating systems

• Electrical systems (lighting, power sockets)

• Bathroom fittings (sinks, toilets)

• Kitchen equipment (cookers, refrigerators)

• Alarm and security systems

3. Integral Features:

• Lifts, escalators, and moving walkways

• Heating and cooling systems

• Water systems (e.g., plumbing, hot water systems)

4. Agricultural and Horticultural Equipment:

• Tractors, combine harvesters

• Irrigation systems

• Greenhouses and polytunnels

5. Business-Related Vehicles:

• Vans, lorries, and trucks

• Motorcycles

Can I keep claiming AIA each year?

Yes and no. The AIA is reserved for new capital expenditure only. So you cannot claim it on old assets, although these may be eligible for writing down allowances.

However, you can keep claiming up to £1 million of the AIA each year on qualifying capital expenditure throughout the year.

How do I apply for the Annual Investment Allowance?

Easy! You apply for capital allowances on your company tax return. See here. 

It’s worth noting that you must make your claim within the tax return for the accounting period. Typically you have 12 months from the end of the accounting period to submit your tax return.