JCB Finance are urging customers who have made taxable profits not to forget about the temporary increase in Annual Investment Allowance (AIA) tax relief that was announced in the 2018 Autumn Budget.
The AIA was increased to £1 Million per year until 1st January 2021 to help support British Businesses to invest and grow, by accelerating the relief that would normally be applied over several years.
Whilst it may seem as though January 2021 is still a long way off, depending a business’s financial year-end, the cut off for benefiting from the increase can be sooner rather than later. For example, if your financial year-end is March you will need to make the purchase(s) or enter into a Hire Purchase agreement before the 1st April 2020, otherwise the allowance available would begin to reduce and progressively revert to the £200,000, in essence you could end up paying more tax than is necessary!
Most businesses can claim the AIA against qualifying assets like plant and machinery or commercial vehicles placed on Hire Purchase just as if you had paid cash so you can preserve your working capital and still benefit from the relief.
Business are also encouraged to check out the lead times on orders of new plant and machinery because the relief is only available in the financial year that you make the purchase. Get the timing of your order wrong and could be costly!
JCB Finance’s Finance Director Rob Heldreich says “The temporary increase in the Annual Investment Allowance was a welcome boost for business when announced in 2018. Time is running out to take advantage of this incentive to invest in plant and equipment. I would urge business owners to speak to their accountants and advisors to ensure they get the timing of purchases right to ensure they maximise the available tax savings.”
JCB Finance is authorised and regulated by the Financial Conduct Authority. JCB Finance is not a tax or financial advisor – always seek advice from your accountant or finance director, because every business’ circumstances are different. Businesses should not make investment decisions purely on a tax basis – there should be a compelling business case for the investment.