Capital allowances: plant and machinery: increase in the amount of the annual investment allowance - May 2010
Legislation will be introduced in Finance Bill 2010 to double the maximum amount of the annual investment allowance (AIA) from the current limit of £50,000 to a new limit of £100,000.
The AIA is currently available to:
- any individual carrying on a qualifying activity
- any partnership consisting only of individuals; and
- any company (subject to limitations)
The increase will have effect for expenditure incurred on or after 1 April 2010, for businesses within the charge to corporation tax (CT), and on or after 6 April 2010, for businesses within the charge to income tax.
Capital allowances allow businesses to write off the costs of certain assets, such as plant and machinery, against their taxable income. They take the place of commercial depreciation which is not allowed for tax. The main rate of writing-down allowance is 20% per annum for general plant and machinery, and 10% per annum for 'special rate' general plant and machinery.
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