What is the Annual Investment Allowance?

Annual Investment Allowance
The Annual Investment Allowance incentivises businesses to invest in assets or equipment by offering tax relief on qualifying purchases up to £200,000.

The Annual Investment Allowance is a type of Capital Allowance, and Capital Allowances are designed to help you reduce the tax you pay HMRC.

The Annual Investment Allowance is designed to encourage businesses to invest in buying machinery and equipment by allowing you to deduct the full cost of the assets from your profits before tax.

If your business is not VAT registered and you purchase an asset which qualifies for the Annual Investment Allowance, you can deduct the full cost of the item from your profits before you work out how much tax to pay HMRC. If your business is VAT registered you can claim the full cost of the item less the VAT (which you can claim in your VAT return).

The Government sets the Annual Investment Allowance, which is currently £200,000. If you are a Numberworx customer your personal bookkeeper will advise you what is and what isn’t eligible for the Annual Investment Allowance, and any other ways you might be able to reduce your tax liability. Our service includes free, unlimited tax and accountancy advice throughout the financial year.

Here to help

We are happy to answer any questions on the Annual Investment Allowance even if you’re not signed up to Numberworx.