The Annual Investment Allowance has been doubled to encourage further investment in plant and equipment, providing accelerated tax relief on spending up to £500,000.
The increased limit will take effect from 1 April 2014 for corporation tax and 6 April 2014 for income tax, providing 100% tax relief for spending on plant and machinery up to £500,000 cap.
From 1 January 2016 the limit will fall to £25,000.
Unless AIA cannot be carried forward but trading losses created through claiming the relief can be carried forward subject to usual loss carry forward rules.
Transitional rules apply for accounting periods straddling the increase and subsequent reduction of relief and care should be taken to ensure where significant expenditure is planned that the full relief is available.
Overall this increase in the AIA threshold is welcome and should stimulate investment by business as the economy continues to recover.
For the full 2014 Budget Summary please click this link BWM 2014 Budget Report