AIA is a tax relief scheme which was introduced in 2008 to encourage business growth. It can be claimed on items such as plant and machinery, whereby businesses can deduct the full value of an item that falls within the annual limit from their taxable profits.
The assets acquired must be required for their business and cannot include cars. The AIA can be claimed by companies, sole traders and partnerships with no corporate members.
The Annual Investment Allowance was temporarily increased to £1 million from 1 January 2019 and was set to fall back to its former level of £200,000 from 1 January 2022. However, the chancellor has announced that it will remain at the £1 million level until March 2023.
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