Good news for commercial property owners as the Annual Investment Allowance (AIA) increase to £1m has been extended from 31 Dec 2021 to 30 March 2023.
What does this mean for the property owner? By utilising the AIA a £1m claim for capital allowances would result in a total tax saving of £190,000 in the first year (for a corporate taxpayer). Without the AIA the property owner would only benefit from around £22,000 of tax saving in the first year (with the remainder received year after year). The AIA therefore allows the property owner to accelerate the capital allowances received.
The AIA was originally £200,000 in 2016 but was increased to £1m from January 2019. It is the government’s hope that the increase will support businesses and encourage business investment, especially for those that are ineligible for the new super deduction.
If you’d like to learn more about the AIA and capital allowances, you can contact us here or give us a call on our number below.