From 1st January 2016, the Annual Investment Allowance (AIA) has now changed to £200,000 from £500,000.
Although the way the transitional rules have been structured means a business with a 31st March 2016 year-end will have a maximum of £425,000 for the period up to 31st December 2015. However, no more than £50,000 of the business’s actual expenditure would be eligible for AIA for the part period 1st January 2016 to 31st March 2016.
In other words, the AIA on 31st December 2015 is £425,000 but from 1st January until March 2016 it’s only £50,000!
For tax planning purposes businesses need to consider whether to incur expenditure in the January to March 2016 period or delay to post 31st March 2016 to benefit from the new AIA of £200,000.
Read our guide to the AIA which includes case studies and further details.
If you have an inquiry please don’t hesitate to contact us.