The Annual Investment Allowance (AIA) limit has changed significantly over the last number of years. However, the limit has been fixed at £200,000 for all qualifying expenditure on or after 1 January 2016.The current £200,000 limit is a generous allowance and will more than cover the annual capital expenditure spend of many small and medium sized businesses. There are transitional rules for businesses whose accounting periods span the operative date of any changes. If the basis AIA changed in the period for which a claim is being made the AIA must be time-apportioned accordingly.The AIA was first introduced in 2008 and is designed to give 100% first year tax relief for qualifying expenditure on plant and machinery. It can be claimed by an individual, partnership or company carrying on a trade, profession or vocation, a UK non-residential property business or a furnished holiday let. Partnerships or trusts with individuals and companies in the business structure do not qualify for the AIA.The AIA is available for most assets purchased by a business, such as machines and tools, vans, lorries, diggers, office equipment, building fixtures and computers.Planning notes:The AIA does not apply to cars. It is also unavailable in a final period of trading, prior to a business closing down.Also, it is not necessary to claim the full relief available. This is particularly important for self-employed business owners who may find they lose all or part of their personal tax allowance if certain conditions apply.Planning all aspects of significant capital expenditure is key and the tax consequences are just one aspect of the factors that will need to be considered. Please call if you need help looking at your capital investment options.