The measure

The AIA was introduced for expenditure from April 2008 to give 100% first-year tax relief for up to £50,000 per annum to businesses incurring expenditure on plant or machinery. This limit has now been doubled to £100,000 from April 2010. For chargeable periods spanning this date, the limit will be time apportioned based on the proportions of the chargeable periods falling either side of April 2010.

The rules about entitlement to an AIA have not been changed, in particular the restriction of one AIA available per group of companies and the ability to allocate the AIA against any plant and machinery expenditure (ie regardless of whether it would have otherwise been allocated to the main pool or special rate pool).

New anti-avoidance provisions have also been introduced for income tax purposes, with the effect of disallowing property loss relief against general income to the extent that the loss is attributable to the AIA and arises as a result of relevant tax avoidance arrangements entered into on or after 24 March 2010.

Who will be affected?

Businesses investing up to £100,000 a year in plant or machinery.

When?

The increase to the AIA limit will have effect for expenditure incurred on or after 1 April 2010 for businesses within the charge to corporation tax and 6 April 2010 for income tax purposes.

The anti-avoidance provisions will apply to losses arising as a result of relevant tax avoidance arrangements entered into on or after 24 March 2010.