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Annual Investment Allowance (AIA)

The government has recently announced that the current Annual Investment Allowance (AIA) of £1 million will now be extended for a further 12 months, until 31 December 2022.

AIA is the tax relief available to UK businesses which is claimed against the purchase of business equipment, primarily plant and machinery. Annual Investment Allowance can be claimed by companies, sole traders or partnerships. It is currently available at a rate of £1 million but was due to revert back to £200,000 from 1 January 2021.

This is welcome news for those who have recently purchased a commercial property or those who are undergoing significant refurbishment. However, with the complicated transition rules at the end of 2021, companies will need to ensure that they time the expenditure carefully to avoid hitting any limits.

The mixture of these rules and restrictions means that commercial property owners are now employing specialists to make a claim on their behalf due to the specialist knowledge required of the relevant HMRC guidelines that accountancy practices are unlikely to have. Additionally, accountants do not have the in-house team who are qualified to identify, value and process these claims.

Many commercial property owners in London are unaware that they are able to make a capital allowance claim and are currently sitting on millions of pounds of tax relief.

Tom Meredith, Tax Director at HMA Tax explains:

“With the restrictions of the 2014 Finance Act and the lowering of special rate pool claims to 6%, the increase of the AIA limits means companies can actually make significantly larger claims than they may otherwise have been able to do.

It is also worth pointing out that groups of companies are only entitled to one AIA between them. It is therefore important to review expenditure across all companies to ensure maximum benefit is obtained.

In the case of commercial property, you need a specialist team to determine the qualifying items in property through an analysis of the embedded items included in the purchase or through careful review of the expenditure to ensure all claims made are maximised.”

At HMA Tax, we are the UKs leading experts on embedded Capital Allowances for commercial property owners. If you, or someone you know owns a commercial property and would like to find out more on how we generate thousands of pounds in tax relief, please call get in touch on 01384 904090 or email

Author: Duncan Chittick