SMEs should take action in order to take advantage of the Annual Investment Allowance

Small businesses should take action now in order to take full advantage of the half a million pound Annual Investment Allowance (AIA) available to them before the rate drops at the start of next year.

This warning comes following the Chancellor’s Summer Budget statement in which he set the AIA at £200,000 for the life of the current Parliament from January 2016.

This amount is higher than the previous limit of £25,000, which was due to come into force at the start of next year, but is still less than half the amount of the current £500,000 limit.

The Allowance is designed to encourage investment by deducting the full value of an item that qualifies for (AIA) from a business’s pre-tax profits.

It applies to all plant and machinery equipment bought by a company, which includes alterations to existing buildings to install other plant and machinery and integral features, such as lifts, escalators and air-conditioning and air cooling systems.

In order to make the most of the current allowance, businesses need to act now and submit any applications ahead of the deadline at the start of next year. Failing to do this could see them miss out on thousands of pounds of potential investment money.