Annual Investment Allowance £1m cap extended for a year

The Treasury has confirmed that the annual investment allowance (AIA), designed to stimulate investment in UK manufacturing, is to be extended further for an additional year in a bid to counter the current downturn in activity.

The AIA provides a tax write off against profits for expenditure incurred on plant and machinery by businesses and owners of commercial property.

Businesses, including manufacturing firms, can continue to claim up to £1m in same-year tax relief through the AIA for capital investments in plant and machinery assets until 1 January 2022.

The extension of the temporary £1m cap was originally due to revert to £200,000 on 1 January 2021.

Jesse Norman, financial secretary to the Treasury, said: ‘It is vital that we support business through the difficult months ahead.

‘Extending the AIA’s £1m cap will give businesses the confidence they need to invest into next year, helping them to grow whilst benefitting the wider economy too.’

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