Government Extends £1m Annual Investment Allowance For Another Year

18 Nov 2020

This extension gives enhanced tax relief and simplifies taxes on plant and machinery expenditure, as well as providing businesses with upfront cashflow support during Covid-related uncertainty.

Businesses, including manufacturing firms, can continue to claim up to £1m in same-year tax relief through the Annual Investment Allowance (AIA) for capital investments in plant and machinery assets until January 1, 2022.

The AIA can be claimed by sole proprietors, corporations and partnerships, although in the case of partnerships, the members must be individuals.

From January 1, 2022, the AIA will revert to £200,000 per annum.

In spring 2021, the Government will also consult on a number of issues as part of a commitment to help protect UK taxpayers through clamping down on promoters of tax avoidance schemes.