Annual Investment Allowance (AIA) for businesses
The increase in the amount of capital expenditure qualifying for 100% tax relief (AIA) is great news for businesses.
The timing of the expenditure is important to maximise the relief available. Unless your year end is 31 March, the rules are very complicated. With a year end that spans the date of change, it may be worth delaying some expenditure until the new rate comes in.
A company with 31 December year end is looking to spend £450,000 on plant and equipment. The example below shows the difference in tax relief where the timing of the expenditure is managed
|31 Mar 2014||300,000||150,000|
|30 Apr 2014||150,000||300,000|
|31 Mar 2014||250,000||150,000|
|30 Apr 2014||150,000||287,500|
|Total Tax Relief||400,000||
Date: 28th March, 2014
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