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Capital allowances: 'Two cheers' for doubled AIA

19th Mar 2014
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One of the centrepieces of a Budget speech designed to support business investment was George Osborne’s announcement that the annual investment allowance would be doubled from the current £250,000 to £500,000 until the end of 2015.

In spite of protests about the complexity of continually tinkering with the AIA, the Chancellor clearly perceived last year’s temporary increase from £25,000 to £250,000 as a crowd-pleaser. Maintaining the same rate and extending it for longer would have been simpler for all concerned, but he opted instead to go for another temporary increase to £500,000 until 31 December 2015.

According to the government, 99.8% of businesses will now receive 100% up-front relief on investments in plant and machinery - but not cars. Accelerating the relief up to £500,000 will encourage small and medium-sized businesses to increase or bring forward their capital investment in plant and machinery. Three-quarters of recipients are located outside London and the South East and “it will particularly help the agriculture and manufacturing sectors,” HMRC said.

Perhaps conscious of the friction caused by the changing rates, HMRC...

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Replies (4)

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Locutus of Borg
By Locutus
19th Mar 2014 17:28

Please can this now be the last change to AIA ...

For at least the next 5 years.

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By ireallyshouldknowthisbut
19th Mar 2014 17:55


It really is maddening, both the tinkering and the computations which are just mad as box of frogs as you can end up having unrelieved spend in one period, and surplus allowances in another which is not claimable despite the total annual spend being below the threshold for the year. At least that will occur a lot less with the new very high threshold. 


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By MarkKing
20th Mar 2014 11:27

A welcome increase but more complexity again

I can only think of one client who will benefit from this as they run about 10 connected companies sharing a pool between them however the transitional rules are always a nightmare for us to juggle let alone the client to plan around. Their businesses have different year ends (although that may change soon) and they open a new one every 12-18 months or so to add to the mix.

As the article says, it's unclear why this figure is subject to such wild variation. It's as if they have no real idea of what the threshold should be.

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By plummy1
04th Apr 2014 18:43

Commercial Property Buyers could benfit.

I would echo the above sentiments but also if they want to promote long term investment and tax relief why not increase the percentage for Writing Down Allowances for the Main and Special Rates Pools.

Probably because increasing WDAs doesn't grab the headlines and will give tax relief beyond the date of the next election.  This was the same Government who decreased the AIA from £100k to £25k and then increased it 9 months later to £250k becasue they realised they had made a mistake.


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