B3.329 Annual investment allowance
The annual investment allowance ('AIA') is a 100% allowance for qualifying expenditure given in the chargeable period in which the expenditure is incurred, up to an annual maximum (currently £1m)1.It is only available to individuals, companies and partnerships of which all the members are individuals2. The person incurring the expenditure must own the plant or machinery at some time during the chargeable period3).
The AIA is made only in the chargeable period in which the relevant expenditure is incurred4; it cannot be deferred to a later period, although it may be used to augment a loss carried forward5. A claim may be made for all or part of the AIA6, but a reduced claim will rarely be appropriate.
For HMRC guidance see CA23080–CA23090.
Additional VAT liability may also qualify for the annual investment allowance7 (see B3.393).
See B3.329A for restrictions on the availability of AIA in various situations.
The annual maximum has changed several times since AIA was introduced and is currently £1m from 1 January 2019 until 31 December 20218. The extension to the temporary increase to the limit was announced by the Government in November 2020. For expenditure incurred before 1 January 2019 and after 31 December 2015, the maximum was £200,000, and this will again be the maximum for expenditure incurred after 31 December 20219. A maximum AIA of £500,000 was available for expenditure incurred on or after 6 April 2014 (income tax) or 1 April 2014 (corporation tax) prior to 1