The Annual Investment Allowance
The workhorse of capital allowances. For most businesses, this is the relief doing the heavy lifting on a fixtures claim, and it is worth understanding properly.
100% relief, up to a million a year
The Annual Investment Allowance, the AIA, gives 100% relief on qualifying plant and machinery in the year you spend the money, up to £1m each year. Spend within that limit and the full cost comes off your taxable profits straight away, rather than being relieved slowly over many years.
It is open to companies, sole traders and partnerships, which is what makes it the relief most of our clients actually use. Where full expensing is companies only, the AIA is for everyone.
Four things that decide how much you get
£1m, made permanent
The limit had bounced around for years. It was set permanently at £1m from 1 April 2023, so you can plan around it instead of watching for the next change.
Main and special rate
The AIA covers both main-rate assets and special-rate ones, the integral features like electrical and cold water systems. It is one of the few reliefs that gives special-rate spend the full 100% up front.
Shared across a group
One £1m allowance is shared between companies in a group and between businesses under common control. You cannot multiply it by splitting spend across related entities, so the sharing rules need watching.
Straddling periods
Where an accounting period straddles a date on which the limit changed, the AIA available is worked out in parts. It is fiddly, and getting it wrong leaves relief on the table or overstates a claim.
Why this is usually the relief in play
When we identify the plant and machinery built into a commercial property, the wiring, the heating, the sanitaryware, the qualifying value has to find a home in your tax return. For most owners, the AIA is that home. It is why a fixtures claim so often lands as 100% relief in a single year rather than a slow drip, provided the spend sits within the annual limit and the timing works.
The value of the claim comes from finding the fixtures and evidencing them properly. The AIA is how that value turns into relief. We deliver the sourced report; a qualified accountant reviews it and decides how the relief is best used, whether through the AIA, full expensing for a company, or the ordinary pools.
Think there might be a claim in your building?
Tell us about your commercial property and we will look at whether there are qualifying fixtures worth claiming. We deliver the sourced report; your accountant reviews it and decides how the relief is used. It costs nothing to ask.