Due to the economic downturn caused by the pandemic, the government has been urged to extend the temporary tax break for businesses investing in equipment – the annual investment allowance (AIA). Has it agreed?

New tax policy

In a news statement dated 12 November, the government announced that the AIA limit, which was due to revert to £200,000 with effect from 1 January 2021, will remain at £1 million for another year.

Plant and equipment

The change of policy means that businesses can continue (until 1 January 2022) to claim a tax deduction for the accounting period in which they purchase qualifying plant and machinery, up to the £1 million cap. No other changes to the AIA rules are indicated in the government’s statement.

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