£1 million Annual Investment Allowance cap extended for a year

The Treasury has confirmed that the £1 million cap on the Annual Investment Allowance (AIA) is to be extended for an additional year as it continues to look at ways to stimulate the economy.

19 Nov 2020

The Treasury has confirmed that the £1 million cap on the Annual Investment Allowance (AIA) is to be extended for an additional year as the government continues to look at ways to stimulate the economy.

The AIA provides a tax write off against profits for expenditure incurred on plant and machinery by businesses and owners of commercial property.

Businesses can now continue to claim up to £1 million in same-year tax relief through the AIA for capital investments in plant and machinery assets until 1 January 2022. The temporary £1 million cap was originally due to revert to £200,000 on 1 January 2021.

Commenting on the extension, Jesse Norman, Financial Secretary to the Treasury, said: 'It is vital that we support business through the difficult months ahead.

'Extending the AIA's £1 million cap will give businesses the confidence they need to invest into next year, helping them to grow whilst benefitting the wider economy too.'

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