Chapter 6 - 2.2.2 - Annual Investment Allowance

Question 1

What does the AIA do?

Answer 1

Offers tax relief at 100% on qualifying expenditure in the year of purchase, up to a maximum

Question 2

What is the maximum AIA?

Answer 2

£1,000,000 in a 12 month accounting period

Question 3

What can the AIA be used against?

Answer 3

The AIA can be used against any assets purchased in the year that would be allocated to the main pool, except assets qualifying for 100% FYA and cars

Question 4

What can we do with any remaining AIA?

Answer 4

Nothing, it cannot be carried forward

Question 5

What happens if expenditure exceeds the AIA?

Answer 5

Then the balance is eligible for the 18% WDA by transferring the balance into the main pool before calculating the WDA for the period

Question 6

What happens where there is a long or short period of account?

Answer 6

Both WDA and AIA are time apportioned accordingly (n/12)

Question 7

What are WDAs and AIAs never restricted by?

Answer 7

Reference to the length of ownership of an asset in the period of account