Just last month, we prompted businesses to think about using the temporary £1million Annual Investment Allowance (AIA) before it fell back to £200,000 from 1 January 2021.
However, on 12 November, HM Treasury announced that the tax-break would remain at its current level until January 2022.
The move is intended to boost confidence amongst companies who are contending with the consequences of the pandemic and simultaneously wanting to plan for the future.
With an additional 12 months at their disposal, businesses can continue to claim up to £1million in same-year tax relief for capital investments in plant and machinery assets.
In last month’s article, we covered how the apportionment of AIA works depending on your companies year-end.
Financial Secretary to the Treasury Jesse Norman said: “Extending the Annual Investment Allowance’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.”
Our Tax Partner, Barry Jefferd, had this to say of the latest announcement: “Considering the allowance was due to revert back to £200,000 on 1 January 2021, this announcement comes quite late in the day. All the same, it is a decision that I back.
“Despite the temporary £1million cap having been extended for another year, temporary remains the key word and clearly, the difference between the two figures is significant.
“Any business with capital expenditure plans in the pipeline for this year or next, should still prioritise the planning that is required to get it right!
“Knowing what you can claim early on in the process will ensure you avoid any unanticipated surprises and that you can utilise the AIA effectively.”
How can George Hay help?
Our experts understand that tax is an integral consideration when it comes to having control of your business and the ability to plan effectively.
We aim to save you time and eliminate confusion whilst also maximising your tax efficiency wherever possible. To find out more about how we can help you and your business, contact the team today.