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Gorgeous George gives you more!

21st Mar 2014
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Will my clients benefit immediately from the temporary increase in the AIA?

The short answer is, possibly. As with all things budget related the devil is in the detail, for corporates the new AIA limit applies from 1 April 2014 and for sole traders and partnerships it’s 6 April 2014.

The next consideration is your clients accounting period. Using a limited company as an example, if the current accounting period ends on the 31 March 2014, then any qualifying expenditure made within the accounting period 1 April 2014 to 31 March 2015 would benefit from the new £500,000 limit. An immediate benefit.

But what about those clients that have a different accounting period? For these clients there are transitional rules in place that mean they will not benefit from the full £500,000 AIA immediately.

Let’s look at an example.

Example One

A limited company has an accounting period 1 November 2013 to 31 October 2014, the AIA available would be:

Accounting period 01/01/2014 to 31/012/2014 the maximum allowance is

01/11/2013 – 31/3/2014* = £250,000 / 12 X 5 = £104,167

01/04/2014 – 31/10/2014 = £500,000 / 12 X 7 = £291,666

TOTAL AIA in year ended 31/10/2014               = £395,833

The first accounting period in which the client can claim the full AIA is the 01/11/2014 to 31/10/2015

*A maximum of £250,000 of expenditure would be covered by the AIA in this period, being the maximum AIA allowed before the increase.

As you can see the accounting period of the business has a huge bearing on the timing of any qualifying expenditure that may or may not qualify for AIA.

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By ugdiv
05th Jul 2014 20:18

Funny dates

The dates look odd to me, especially the month 012.

"Accounting period 01/01/2014 to 31/012/2014 the maximum allowance is"

Also should it be "1 November 2013 to 31 October 2014"?

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