The Annual Investment Allowance (AIA) is a tax relief mechanism that enables businesses to deduct the entire qualifying expenditure on plant and machinery from their pre-tax profits.

Eligibility for the AIA extends to individuals, partnerships, or companies engaged in a trade, profession, or vocation, as well as those involved in a UK non-residential property business, or a furnished holiday let. It is noteworthy that only partnerships or trusts with a diverse mix of individuals and companies within their business structure do not qualify for AIA.

As of April 1, 2023, a substantial and enduring adjustment increased the AIA from £200,000 to £1 million. The transitional rules that were previously in effect for chargeable periods spanning April 1, 2023, have been eliminated, as they are no longer deemed necessary.

The AIA encompasses a broad spectrum of assets acquired by a business, including but not limited to machines and tools, vans, lorries, diggers, office equipment, building fixtures, and computers. However, it's important to note that the AIA does not apply to expenditures related to cars.



To benefit from the AIA, a claim must be submitted within the period in which the item was purchased. This period is defined as either the date when a contract is signed (if payment is due within 4 months of signing) or the actual payment date (if payment is due more than 4 months later).