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.’