The Annual Investment Allowance (AIA) gives businesses a 100% up front tax deduction on qualifying plant and machinery expenditure, with the aim of encouraging UK businesses to invest in capital plant and machinery.
The Chancellor’s announcement has built on the temporary increase to the AIA announced in last year’s Budget, doubling the limit of qualifying expenditure to £500,000.
The increased limit will apply to expenditure incurred after 1 April 2014 for corporation tax and 6 April 2014 for income tax until 31 December 2015. After 31 December 2015, the limit will revert to £25,000 unless changed in a future Budget.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.