Equal Figures Bookkeeping

Business & Accounting Spreadsheets

Annual Investment Allowance (AIA)

AIA is an allowance to enable UK companies, partnerships or self employed individuals to write off 100% of the cost of newly purchased assets such as machinery, business vans, tools, office equipment, computers, thus providing a welcome tax break for businesses and stimulating business investment in the economy. The allowance does not apply to cars.

The AIA applies to purchases made in the first year of ownership only.

Anything over the annual allowance figure is added to the relevant pools for writing down allowances.

Those who are VAT registered can recover the VAT on the asset purchased and it would be the net cost that will qualify for AIA. For those who are not VAT registered it will be the full price including VAT that qualifies for the AIA.

The current limit as of 1 January 2016 is £200,000.

It can become a little confusing because you will need to apportion the rate at which the allowance is given, and it depends on the the which month your trading year ends.

When deciding whether an item of expenditure falls before or after the cut off dates, dates above, the relevant date is the invoice date, rather than the date of ordering or date of payment.

If the amount goes over the allowance limit then it can be added to the either the Main Pool or the Special Pool for writing down allowances.

The accounting/bookkeeping systems sold on our website have Capital Allowance Calculators included.