Maximise Your Annual Investment Allowance

The Annual Investment Allowance (AIA) is a tax relief available in the United Kingdom that provides businesses with a 100% tax write-off for the cost of most plant and machinery assets up to a specified limit; this includes commercial vehicles. This means that businesses can deduct the full cost of these assets from their taxable profits, thereby reducing their tax liability. The limit for the AIA changes periodically and for the tax year 2022-2023 it is set at £1 million, meaning businesses can claim up to £1 million of tax relief for investments in eligible plant and machinery assets during this period.

What you can claim on?

In the UK, the Annual Investment Allowance (AIA) can be claimed on most plant and machinery assets, including:

Equipment and machinery used in a business, such as computers, tools, and manufacturing machinery
Office equipment, such as furniture and fittings, telephones, and photocopiers
Motor vehicles used for business purposes
Integral features, such as electrical systems, air-conditioning, and lift installation

It is important to note that some assets, such as land and buildings, are not eligible for the AIA. Additionally, the AIA is not available for investments in assets used mainly for personal purposes.

The AIA amount?

the current Annual Investment Allowance (AIA) amount in the UK is £1 million for the tax year 2021-2022. This means that businesses can claim up to £1 million of tax relief for investments in eligible plant and machinery assets during this period.

It is worth noting that the AIA limit is subject to change and it is advisable to check the latest limit from official sources such as HM Revenue & Customs or a tax professional to ensure the accuracy of the information.

AIASole Traders/PartnershipsLimited Companies
£1 Million1 January 2019 - 31 March 20231 January 2019 - 31 March 2023

Investing in a commercial vehicle can be a valuable addition to a business and the AIA provides a way to make this investment while benefiting from significant tax savings.

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When can you claim?

You can claim the Annual Investment Allowance (AIA) in the same tax year that you incur the cost of the eligible plant and machinery assets. To make a claim, you should complete your tax return for the relevant tax year and include the amount of AIA you are claiming.

The date you bought it is:

when you signed the contract, if payment is due within less than 4 months

when payment’s due, if it’s due more than 4 months later

If you buy something under a hire purchase contract you can claim for the payments you have not yet made when you start using the item. You cannot claim on the interest payments or charges.

More than one business or trade?

If you’re a sole trader or a partnership and you have more than one business or trade, each business usually gets an AIA.

You only get one AIA if the businesses are both:

  • controlled by the same person
  • in the same premises or have similar activities

If 2 or more limited companies are controlled by the same person they only get one AIA between them. They can choose how to share the AIA.

How can you claim: Claim on your tax return. Read more about how to claim capital allowances.