The Annual Investment Allowance (AIA) was permanently set at £200,000 for all qualifying expenditure on or after 1 January 2016. The prior limit had been £500,000 but was set to revert to its original limit of £25,000 from 1 January 2016 until the new permanent level was announced.The £200,000 limit is a generous allowance and will cover the annual capital expenditure spend of many small and medium sized businesses. 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 business. 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. The AIA does not apply to cars.With the end of the tax year fast approaching businesses should ensure that they make the most of the available capital allowances reliefs for the current tax year. This also includes claims for first year allowances and business cars.The AIA is not available in the final year of trading.