For businesses with accounting periods straddling 31 December 2015 planning on significant investment in plant & machinery, the AIA is reducing from £500,000 to £200,000 from 1 January 2016. Therefore it is important to consider investing in plant & machinery before 1 January 2016 to maximise allowances.
For accounting periods that straddle 1 January 2016, the allowance will be pro-rated and restrictions will apply to expenditure falling after 1 January 2016 so it is important to consider the timing of expenditure.
For an accounting period ending on 31 March 2016 the maximum AIA will be £425,000, being 9/12 x £500,000 = £375,000 plus 3/12 x £200,000 = £50,000.
For expenditure incurred post 1 January 2016 the maximum AIA available will be £50,000 whereas the full £425,000 will be available for expenditure incurred before 1 January 2016.
