Annual Investment Allowance is a form of tax allowable depreciation. 100% tax allowances are available on certain assets in the year of purchase up to certain expenditure levels.
The current level of allowable expenditure that can be claimed for the relief is £100'000 in any trading year up to 31.03.12 or 05.04.12 for companies and sole-traders respectively.
At 01.04.12 and 06.04.12 this AIA Annual Investment Allowance limit will be reduced to £25'000.00 This means any expenditure over and above this amount will only be subject to standard writing down allowances that currently run at 20% but will reduce to 18% as of 31.03.12 and 05.04.12.
If you are looking at investment in
the near future on certain assets it is essential
that this reduction in AIA is taken into account, as
a purchase before the above dates may be tax
efficient if the AIA can be claimed at the higher