\n\tFrom 1 January 2016, the AIA was increased to an annual limit of £200,000. Unlike previous changes, this is a permanent increase.<\/p>\n
\n\tThe AIA allows businesses to write off 100% of expenditure in qualifying assets and equipment, up to the appropriate limit, against their tax liabilities. In effect, qualifying expenditure is treated as any other business expense: it reduces taxable profits.<\/p>\n
\n\tThere have been a number of changes to the £200,000 limit in recent years and where the AIA ceiling has changed, there are transitional considerations that need to be taken into account.<\/p>\n
\n\tThe following example illustrates how these transitional arrangements work in practice:<\/p>\n
\n\tWhere a business has a chargeable period that spans 1 January 2016, the maximum allowance for that business’s transitional chargeable period comprises 2 parts:<\/p>\n
\n\t(a) the AIA entitlement, based on the temporary £500,000 annual cap for the portion of the period falling before 1 January 2016<\/p>\n
\n\t(b) the AIA entitlement, based on the £200,000 cap for the portion of the period falling on or after 1 January 2016.<\/p>\n
\n\tA company with a 12-month chargeable period from 1 April 2015 to 31 March 2016 would calculate its maximum AIA entitlement based on:<\/p>\n
\n\t(a) the proportion of the period from 1 April 2015 to 31 December 2015, that is, 9\/12 x £500,000 = £375,000, and<\/p>\n
\n\t(b) the proportion of the period from 1 January 2016 to 31 March 2016, that is 3\/12 x £200,000 = £50,000.<\/p>\n
\n\tThe company’s maximum AIA for this transitional chargeable period would therefore be the total of (a) (b) = £375,000 £50,000 = £425,000, although in relation to (b) (the part period falling on or after 1 January 2016) no more than £50,000 of the company’s actual expenditure in that part period would be covered by its transitional AIA entitlement.<\/p>\n
\n\tThe AIA remains a valuable tax allowance, especially for smaller businesses. It will be interesting to see if Philip Hammond announces a further boost to investment by increasing this relief as part of his autumn statement November 2016.<\/p>\n","protected":false},"excerpt":{"rendered":"
From 1 January 2016, the AIA was increased to an annual limit of £200,000. Unlike previous changes, this is a permanent increase. The AIA allows businesses to write off 100% of expenditure in qualifying assets and equipment, up to the appropriate limit, against their tax liabilities. In effect, qualifying expenditure is treated as any other […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[1],"tags":[],"class_list":["post-2946","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/posts\/2946","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/comments?post=2946"}],"version-history":[{"count":0,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/posts\/2946\/revisions"}],"wp:attachment":[{"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/media?parent=2946"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/categories?post=2946"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/tags?post=2946"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}