Annual Investment Allowance (AIA)

The Annual Investment Allowance (AIA) is a tax relief that is claimable by sole traders, limited companies and partnerships. If you are a sole trader, you can claim it for purchasing equipment used for your business, such as tools or a laptop. If you buy a piece of equipment that qualifies for AIA, you can deduct the full cost when you calculate your annual profit and the relevant tax.

AIA was first introduced in 2008 to encourage businesses to invest in property and equipment to boost economic growth. Below are some examples of purchases that you can claim back as part of AIA:

  • Computer equipment
  • Machinery
  • Office furniture
  • Specific vehicles
  • Air conditioning
  • Farming equipment

You then owe tax based on your income minus your AIA purchases. Be sure to check with an accountant as to the purchases that qualify for AIA as not every piece of equipment will be eligible, even if you intend to use it for your business.

Frequently Asked Questions

  • Which vehicles qualify for AIA?

    A specialised van, eg. a tow-truck may qualify, whereas a standard car would not qualify as this could be deemed as a personal purchase that you just also use for work. When you look to claim a new vehicle as part of your AIA you should check with an expert for clarification.

  • When do I pay my income tax?

    Self-Assessment tax returns must be filed with HM Revenue and Customs by 31st January following the end of the tax year. For help with your tax return, contact our experts today.

Search More Terms

News & Insights

5 days ago
Are you considering whether to buy or lease a company vehicle?  Both options have their pros and cons, and it’s impo...
Are you considering whether to buy or lease a company vehicle?  Both options have their pros and cons, and it’s important to know the tax implications beforehand.  Read on to find out how each decision affects your business! ...
1 week ago
Received a notice about an overdue confirmation statement? Don’t worry! It’s a common occurrence and, thankfully...
Received a notice about an overdue confirmation statement? Don’t worry! It’s a common occurrence and, thankfully, doesn’t come with late filing fees. Let’s walk through how you can quickly and easily file your limi...
2 weeks ago
With the Labour Party coming to power, there are a lot of questions and uncertainty around what the labour government ef...
With the Labour Party coming to power, there are a lot of questions and uncertainty around what the labour government effect on businesses will be and what the economy may look like, given that they haven’t been in power since 2...
2 weeks ago
Have you ever asked yourself, ‘what happens if my business has a HMRC enquiry’? Receiving a letter from HMRC stating...
Have you ever asked yourself, ‘what happens if my business has a HMRC enquiry’? Receiving a letter from HMRC stating that they want to check the accuracy of your most recent accounts can be a very daunting experience. Even if ...
2 weeks ago
Many UK businesses ask themselves the question, ‘why is My Company Tax Bill So High?’. You’ve probably asked yours...
Many UK businesses ask themselves the question, ‘why is My Company Tax Bill So High?’. You’ve probably asked yourself this question too. Especially if you’ve found your way to this article. This article aims at highlightin...
3 weeks ago
Running a business in the current economic climate can be challenging so the idea of voluntarily registering for another...
Running a business in the current economic climate can be challenging so the idea of voluntarily registering for another tax may seem counterintuitive at first.  However, many savvy business owners are leveraging the benefits...
3 weeks ago
Most limited company directors have a director’s loan account (DLA), but not everyone understands what it is. In t...
Most limited company directors have a director’s loan account (DLA), but not everyone understands what it is. In this article, we will outline the main concept of the director’s loan account and how it affects both you...
4 weeks ago
One of the reasons many people start their own business is for the freedom and flexibility that comes with being your ow...
One of the reasons many people start their own business is for the freedom and flexibility that comes with being your own boss. But what happens when you are looking to start a family? Are you entitled to Maternity pay? If you are...

Subscribe Now

Receive our latest news & insights directly to your fingertips.