Reduction of the Annual Investment Allowance on the Horizon

Business owners and managers should be aware and plan for the reduction of the Annual Investment Allowance (AIA) on 1st January 2021 from its two year temporary level of £1 million back to £200,000 per annum.

You should note that there is a cap on any expenditure on or after 1st January 2021. Therefore, if your financial year runs from 1st April 2020 to 31st March 2021, the AIA for expenditure from 1st January to the end of your financial year is capped at £50,000, making the total AIA for the 12 month period £800,000 (9/12 x £1m + 3/12 x £200k).

If you are unsure about your current expenditure and how the reduction in AIA will affect your position, please do not hesitate to contact us on 01384 376964

Folkes Worton – Accounting for the Future