Frequently Asked Questions

Tax relief on acquiring fixed assets

For the majority of small and medium sized businesses, tax relief on the costs of buying plant and machinery is obtained through the Annual Investment Allowance.   Plant and machinery includes a variety of capital expenditure, including computer equipment, office equipment, commercial vehicles and shop floor plant and machinery.

Where assets are acquired under contract hire or leasing, tax relief is received in the periods when payments are made.

No tax relief is generally available on capital expenditure relating to land and buildings. Intangible assets, such as goodwill and patents, have their own regime for tax relief.

Annual Investment Allowance (AIA)

The AIA replaced most other forms of tax relief on plant and machinery in April 2008. Since that date, 100% tax relief has been given on annual expenditure on plant and machinery up to the prescribed level.

The annual expenditure levels allowed for AIA have fluctuated widely and have been as low as £25,000 per year and as high as £500,000 per year. The current level of annual expenditure is £500,000, but this is due to reduce to £25,000 on 31 December 2015.

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