Annual Investment Allowance
Calculate first-year capital allowances on plant and machinery.
Asset Details
100% first-year deduction on qualifying plant & machinery investments.
Add assets and calculate to see your capital allowances
Important Disclaimer
This tool provides indicative calculations only and does not constitute financial, accounting, tax, or legal advice. The accuracy of results depends on the accuracy of information you provide. Consult a qualified professional for complex situations.
Frequently Asked Questions
What is the Annual Investment Allowance limit for the 2026/27 tax year?+
For the 2026/27 tax year, the Annual Investment Allowance (AIA) remains at £1 million, allowing SMEs to deduct the full cost of qualifying plant and machinery from taxable profits. This means a business spending £200,000 on new equipment can immediately reduce its corporation tax bill by the full amount. There is no change to this threshold from the previous year, providing certainty for capital expenditure planning.
How does the AIA interact with the 50% main rate pool for long-life assets?+
The AIA applies to most plant and machinery before any assets are allocated to the main rate pool, regardless of their lifespan. If a business purchases a long-life asset costing £1.2 million, it can claim £1 million under AIA, with the remaining £200,000 entering the main pool to be written down at 50% in the first year. This ensures immediate relief on the majority of the spend before slower writing down allowances apply.
Can contractors claim AIA on equipment used for both business and personal purposes?+
Contractors can only claim AIA on the proportion of equipment used exclusively for business purposes, as personal use disqualifies the claim entirely. For example, if a laptop costs £1,500 and is used 80% for client work, the allowable AIA claim is capped at £1,200. HMRC requires clear records to substantiate the business use percentage if the asset is shared.
What happens to the AIA if my business has a 15-month accounting period in 2026/27?+
If your accounting period exceeds 12 months, the AIA limit is apportioned based on the number of days in the period that fall within the 2026/27 tax year. For a 15-month period, you would calculate the daily AIA rate of £2,739.73 (£1m / 365) and multiply it by the days in the relevant tax year. This prevents businesses from claiming more than the statutory annual limit regardless of their financial year length.
Are electric vehicle charging points eligible for the full AIA in 2026/27?+
Yes, electric vehicle charging points installed at business premises are eligible for 100% of their cost to be claimed under the Annual Investment Allowance. This applies to both the hardware and the installation costs, provided the equipment is not part of a building's structure. Claiming this allowance allows businesses to fully offset the cost against taxable profits in the year of purchase.
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