Annual Investment Allowance (AIA)
Did you know that customers who delay their Commercial Vehicle purchase until after March 2012 could miss the opportunity to reduce their tax bill?
From April 2012 the Annual Investment Allowance (AIA) limit is changing. The current AIA limit is £100,000 and from April 2012 this limit reduces to £25,000.
What is the Annual Investment Allowance?
The Annual Investment Allowance is a tax allowance pool which
businesses can use to claim 100% writing down allowances on plant and
equipment purchases. This includes purchased Commercial Vehicles.
What is changing?
The current tax allowance limit is £100,000 and from April 2012 this limit reduces to £25,000
How does it work?
All plant and equipment (including commercial vehicles) up to the AIA limit bought in the financial year can be included in the AIA. Businesses buying a Commercial Vehicle can claim 100% writing down allowances against the AIA. The total amount of utilised AIA is then offset against any taxable profit.
What will this mean for Commercial Vehicle Customers?
In this example the customer is purchasing two vans at a cost of £20,000 each and has already utilised £25k of their AIA for other plant and equipment. In this example, if the customer delays their purchase they could pay additional tax of £11,680 in this example.
Now for the good news…
Purchasing a new commercial vehicle before April 2012 could provide you with increased financial benefits.
Time is running out so don't delay, please visit www.hm-treasury.gov.uk/d/ for more detailed information about AIA changes.
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Customers should always seek independent professional advice in relation to taxation and VAT issues. Restrictions apply.
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