Annual Investment Allowance
The Annual Investment Allowance (AlA) allows businesses to deduct qualifying expenditures up to the available limit when calculating profits, providing immediate tax relief for the expenditure. The AIA is available to unincorporated businesses and to companies.
The temporary limit of £1 million, which has applied since 1 January 2019, has been made temporary, and will not revert to £200,000.
super-deduction
Companies can claim a super-deduction for most expenditure that qualifies for main rate capital allowances where that expenditure is incurred between 1 April 2021 and 31 March 2023. The main exclusion is expenditure on cars.
The super-deduction provides an enhanced deduction of 130% of the expenditure. If you run your business as a company, time is limited to take advantage of the super deduction (which provides a better rate of relief than the AIA).
50% first-year allowance
Companies can also benefit from a 50% first-year allowance for qualifying expenditures incurred from 1 April 2021 to 31 March 2023 which would otherwise qualify for special rate writing down allowances of 6%.
The allowance is beneficial where the AIA limit has been used up.