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

New 5 hours ago
The financial challenges of freelancing are often a burden most people don’t anticipate. Over the years, the prices ch...
The financial challenges of freelancing are often a burden most people don’t anticipate. Over the years, the prices charged are increasing faster than the personal tax rate bands. As a result of this, freelancers who would have ...
2 weeks ago
What are the VAT filing deadlines UK 2025, how do you prepare for VAT compliance and what is VAT? Value Added Tax (VAT) ...
What are the VAT filing deadlines UK 2025, how do you prepare for VAT compliance and what is VAT? Value Added Tax (VAT) is a tax added to goods and services sold by businesses that are registered for VAT. Businesses in the UK, hav...
1 month ago
Completing VAT returns can be challenging for small business owners, with substantial legislation and rules complicating...
Completing VAT returns can be challenging for small business owners, with substantial legislation and rules complicating matters further. It can be quite easy to make a mistake if you are not well versed in UK VAT legislation. At ...
1 month ago
Whether you are self-employed or run your own business, managing taxes can be daunting. Occasionally mistakes can happen...
Whether you are self-employed or run your own business, managing taxes can be daunting. Occasionally mistakes can happen, but fortunately HMRC allow you an opportunity to rectify any mistakes through a voluntary disclosure. This a...
1 month ago
Financial consulting services cover a range of advisory activities designed to help companies manage finances effectivel...
Financial consulting services cover a range of advisory activities designed to help companies manage finances effectively. An accountant can provide this, with the expertise and knowledge needed to help you manage finances. The pr...
1 month ago
UK tax on Instagram earnings is something most creators fail to account for. Instagram has become more than just a place...
UK tax on Instagram earnings is something most creators fail to account for. Instagram has become more than just a place to share videos. It’s an avenue for content creators to monetise their creativity. Whether you’re...
1 month ago
The Autumn Budget 2024 will have an impact on businesses in the UK. As announced, taxes are set to rise by £40 billion,...
The Autumn Budget 2024 will have an impact on businesses in the UK. As announced, taxes are set to rise by £40 billion, with a substantial £25 billion coming from increased employers’ national insurance contributions. This...
2 months ago
If you own a business in the hospitality industry you are likely being crucified with high VAT bills which seem to decim...
If you own a business in the hospitality industry you are likely being crucified with high VAT bills which seem to decimate your cash reserves each quarter. Across the UK many businesses are feeling the squeeze of the cost-of-livi...

Subscribe Now

Receive our latest news & insights directly to your fingertips.