From January 2016, the annual limit for AIA expenditure has been set at a new permanent limit of £200,000. Accordingly, this is the amount that can be claimed for 2016-17.
AIA is generally available on a purchase of plant and machinery that can include:
- Fixtures and integral features
- The alteration of land for the purpose only of installing plant or machinery
- Vans, lorries and motorcycles
- Motor cars
- Expenditure which would not qualify for capital allowances such as on buildings or structures.
- Plant and machinery which was originally used for another purpose, for example, items owned personally which are subsequently introduced into the taxpayer’s business.
- Plant and machinery acquired in the final period of business before the cessation of trade.
- Sole traders or partners using cash accounting as from 6 April 2013 as this has modified rules in respect of deductions for plant and machinery.
- A partnership with a corporate partner which could be a company or an LLP.
Business owners should be advised that a claim for AIA in the final period of trading prior to cessation of trade would not be allowed.