Annual Investment Allowance – What is it and How Can You Benefit?

If you’re a small business looking to spend on assets like lorries, vans or EV charging points, it pays to be up to date with the Annual Investment Allowance rules.

The Annual Investment Allowance, or AIA, is a way to claim tax relief on many assets that your business will buy and can be a lifesaver during these difficult financial times.

It covers the purchase of many types of business assets, including lorries and trucks and some infrastructure, like electric vehicle charging points.

The business can deduct the total amount of expenditure up to a certain limit from its taxable profits.

The government sets the limit for AIA-qualifying expenditure – it was previously around £200,000 but it has risen massively in recent years and was temporarily set at £1 million in January, 2019. The good news for businesses is that that increase has now been made permanent.

Most assets purchased for business purposes can be claimed as qualifying expenses for AIA, however, there are exceptions. Cars aren’t covered, for instance.

Some assets also qualify for a super-deduction, where businesses can claim 130 per cent of expenditure against net profits, but this only applies to expenditure between April 1, 2021 and March 31, 2023.

Another piece of good news for businesses is that hire purchase items are eligible for super-deduction. The covers assets like lorries and vans, but again cars are not included.

If you are investing in a fleet of electric vehicles, help is available, however, as new and unused zero emission or electric cars are eligible for 100 per cent first-year allowance, if purchased between April 1, 2021 and March 31, 2023.

The AIA has been a real bonus for many businesses during the pandemic and the fact that the £1 million limit is being extended is great news.

The super-deduction and 100 per cent first-year allowance rules are another great incentive to invest in fleets of vehicles now – as they are both due to end in March 2023.

If you are investing in fleets of vehicles, trucks, vans or electric cars, speak to an expert to find out what tax incentives you are eligible for.

We can help source the best vehicles for your business, and we can also offer advice on the tax breaks too. Get in touch with us for impartial, expert and honest advice.

Learn more about how we can help by calling 0333 006 3825 or emailing

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