The Annual Investment Allowance - the story so far ...

Posted on March 4, 2009 by Cathy Corns

The ‘annual investment allowance’ (AIA) was introduced from April 2008 (1 April for corporation tax and 6 April for income tax) to provide a 100% allowance on the first £50,000 of expenditure on plant and machinery (other than cars). It replaced the first-year allowances regime for small and medium-sized enterprises. 

What lessons can be learned so far? 

The real problem is that for accounting periods straddling April the position is complicated! The key issues are:

1.      When was the expenditure incurred?

2.      What amount of AIA is available on a time basis?

3.      Against which assets should the AIA be claimed?

4.      What about the interaction with short-life assets?

Is it equitable that identical transactions can be taxed very differently according not only to the date expenditure is incurred but also because of different accounting dates?

Tags: , , ,
Trackbacks (0) Links to blogs that reference this article Trackback URL
http://smeplus.mercerhole.co.uk/admin/trackback/114665
Comments (2) Read through and enter the discussion with the form at the end
Alex Boden - March 18, 2009 4:31 PM

Hi
I found the articale very interesting. My partner is in a firm, a LLP partnership, with approx 50 partners.

Would I be right in thinking that the £50K allowance would be per partnership regardless of how much partner there are?

Thanks

Alex

Cathy Corms - March 19, 2009 10:22 AM

Alex

In principle the £50K is available to any partnership regardless of size providing all of the partners are individuals. There are some further restrictions including on related businesses and on certain types of expenditure.

Thanks

Cathy

Post A Comment / Question Use this form to add a comment to this entry.







Remember personal info?
Send To A Friend Use this form to send this entry to a friend via email.