The Annual Investment Allowance expenditure amount has been extended to £1 million until 31 December 2021. 

The Annual Investment Allowance (AIA) allows 100% tax relief for capital expenditure on Plant & Machinery

  • The government increased the amount of qualifying expenditure to which the AIA applies from £200,000 to £1,000,000 from1 January 2019.
  • The increased £1 million cap was meant to cease on 31 December 2020.
  • In November 2020 the government announced that the cap will extend until 31 December 2021. 

It is assumed that the rate of AIA will return to £200,000 as of 1 January 2022. Expenditure which does not qualify for the AIA may qualify for other types of capital allowances.

Useful guides

Capital allowances: Rates and allowances
An overview of the various capital allowances available to businesses and the current rates.

Plant and Machinery
What expenditure qualifies as plant and machinery? What is treated as part of a building? What is excluded?

Capital Allowances
Who can claim? What are qualifying activities for capital allowances purposes?

Annual Investment Allowance 
A detailed overview of the AIA.

External links

HM Treasury press release