Planning the timing of expenditure on fixtures, fittings, plant and equipment carefully can ensure clients make the most of the current temporary increase to Annual Investment Allowance (AIA) to claim a 100% tax deduction.

The 100% Annual Investment Allowance amount for expenditure on plant and machinery was temporarily increased from £200,000 to £1 million between 1 January 2019 and 31 December 2020, and was due to revert back to £200,000 from 1 January 2021 onwards. However, the government announced on 12 November 2020 that, to stimulate investment in UK manufacturing and support business confidence, the expiry date for the £1 million annual allowance will be extended by a further year to 1 January 2022.

The extension to the temporary increase of the AIA to 1 January 2022 is a welcome incentive to support and encourage businesses investing in plant and machinery, particularly during this uncertain period. By extending the limit for a further period, businesses can plan their capital expenditure over the next year to maximise the 100% tax relief available for qualifying expenditure.

So buy your new plant before 01/01/22 and you stand to save up to £152,000 in tax if a company and more if a sole trader!!!