The Chancellor announced in the Autumn Budget an extension of the temporary increase in the Annual Investment Allowance (AIA) to 31 March 2023.
Most corporate and unincorporated businesses are able to utilise the AIA to claim 100% tax relief on their qualifying expenditure on plant and machinery.
The allowance was temporarily increased from £200,000 to £1 million for expenditure incurred on or after 1 January 2019 and was due to revert back to £200,000 from 1 January 2022. The Chancellor has announced that the £1 million allowance will now be retained until 31 March 2023.
Transitional rules will apply to accounting periods that span 1 April 2023.
For companies, this aligns the end of the temporary AIA with the end of the ‘super-deductions’ as announced by the government in Spring Budget 2021.
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