Capital allowances – Temporary increase of the Annual Investment Allowance

The measure

From 1 January 2019 the maximum amount of the Annual Investment Allowance (AIA) available to businesses investing in plant and machinery will temporarily increase from £200,000 to £1m. 

From 1 January 2021 the AIA will once again be capped at £200,000.


Who will be affected?

Businesses investing more than £200,000 in plant and machinery in any year.


When will the measure come into effect?

The measure will have effect from 1 January 2019 for a temporary period of two years.


Our view

The impact of this measure is likely to be significant for small and medium size businesses as it will allow far more taxpayers to benefit from an in-year deduction for all their expenditure on plant or machinery.