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B3.329 Annual investment allowance

The annual investment allowance ('AIA') is a 100% allowance for qualifying expenditure given in the chargeable period in which the expenditure is incurred, up to an annual maximum of £1m¹.It is only available to individuals, companies and partnerships of which all the members are individuals². The person incurring the expenditure must own the plant or machinery at some time during the chargeable period³).

The AIA is made only in the chargeable period in which the relevant expenditure is incurred⁴; it cannot be deferred to a later period, although it may be used to augment a loss carried forward⁵. A claim may be made for all or part of the AIA⁶, but a reduced claim will rarely be appropriate.

For HMRC guidance see CA23080–CA23090.

Additional VAT liability may also qualify for the annual investment allowance⁷ (see B3.393).

See B3.329A for restrictions on the availability of AIA in various situations.