Old Mill Updates

COVID-19: Annual Investment Allowance extended to the end of 2021

Following repeated lobbying, the government has announced an extension of the £1 million Annual Investment Allowance (AIA) temporary cap until 1 January 2022 in a move to stimulate investment particularly into the manufacturing sector.

The temporary increase was set to expire at the end of next month but, in recognition of the challenges that UK industry is currently facing, the Treasury has decided to extend the £1 million tax break to stimulate investment recognising that relatively few businesses have been in a position to make use of the increased AIA in the way that they might otherwise have done.

For full details click here

17th November 2020

In a move designed to boost confidence as businesses try to navigate through the coronavirus pandemic Jesse Norman, Financial Secretary to the Treasury, commented ‘Extending the Annual Investment Allowance’s £1 million cap will give businesses the confidence they need to invest into next year, helping them to grow whilst benefitting the wider economy.’

David Maslen, a director in Old Mill’s tax team comments ‘Confidence is still extremely weak so inward investment in areas like plant and machinery during 2020 hasn’t really been on the agenda for many businesses that are operating in survival mode. Any additional stimulus from the Treasury is very welcome, but at the same time I would question whether a one-year extension is far reaching enough to get things moving, particularly with the added uncertainty around whether the UK can negotiate a deal with the EU.’


What is the Annual Investment Allowance?

The AIA is a 100% upfront capital allowance that applies to qualifying expenditure up to the specified annual limit of £1 million until 31 December 2021.

Essentially, this allowance entitles businesses to a 100% deduction against profits for the cost of purchasing qualifying plant and machinery in the year of purchase.

Click here for guidance on what constitutes plant and machinery under the AIA.

For further information please contact your usual Old Mill adviser or alternatively click here.