Ensuring that the annual investment allowance (AlA) is claimed on all new items of plant and machinery can save considerable amounts of tax.
The AlA gives a 100% deduction against profits up to the amount of the allowance. The allowance is £250,000 for a temporary period of two years from 1 January 2013, after which it will revert to £25,000 from 1 January 2015.
Where the chargeable accounting period spans 1 January 2013, the allowance is determined pro rata for the period before and after 1 January 2013. The pro rata limits set the maximum AlA expenditure in each period.
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