Annual Investment Allowance changes

July 2010

Presently firms that invest in qualifying assets, commercial vehicles, plant, computers and other equipment can write off up to £100,000 in each trading year against their business profits.

This Annual Investment Allowance (AIA) can be claimed by sole traders, partnerships and companies.

If you are self-employed and a higher rate tax payer this is a particularly beneficial allowance - you could recover 40% or possibly 50% of your investment (up to the £100,000 limit).

However, Mr Osborne announced in his June Budget that this allowance is to be reduced from April 2012 to just £25,000.

Businesses should re-examine their investment plans in the light of this announcement.

You have an unprecedented 21 months to act - get your investment funding in place if you have a genuine commercial reason for purchasing.

As the possible tax years affected by your decision include 2010-11 and 2011-12 it would be as well to consider a tax planning review to make sure you make the most of the opportunity. Of course we would be delighted to help you undertake such a review.