Important change to Annual Investment Allowance

12th August 2015

The Annual Investment Allowance enables a business to claim tax relief on purchased capital equipment during each tax year, and there has been a temporary level of £500,000 in place since April 2014.  This is being reduced to a permanent level of £200,000 from 1 January 2016, so capital equipment requirements should be considered before the end of 2015.

“Take advantage between now and the end of the year to order and collect all the equipment required – bring your bigger business purchases such as vans forward, particularly if you have had a profitable year,” advised Steve Bridge, the Managing Director of Mercedes-Benz Vans.

“Remember, only vans that are purchased are allowable under the Annual Investment Allowance, and that includes those financed using Hire Purchase or Agility.  Leases do not qualify for the AIA.  

“We are the only manufacturer to offer the choice of Hire Purchase or Agility (Contract Purchase) across the whole van and truck range, giving businesses the benefits of accelerated allowances, low capital outlay, and a guaranteed value if you choose Agility.

“Any capital expenditure in excess of the Annual Investment Allowance limit during the financial year is dealt with in the main allowance pool, and written down at the standard allowance rate, currently 18% per annum.

“Best advice is to check with the business accountant, but it is worth noting that this important reduction in Allowance is happening soon.”