Annual Investment Allowance (AIA) Decrease 2nd November 2020 The annual investment allowance (AIA) limit is currently due to decrease from £1 million to £200,000 from 1 January 2021. Many businesses will have deferred decisions about purchasing capital equipment this year as a result of the COVID-19 pandemic, leading to a number of professional bodies urging the Chancellor to postpone this decrease. However, it now looks likely that the reduction will go ahead as planned after the cancellation of the Autumn Budget. Where a business has a 31 December 2020 year-end then they can take full advantage of the £1 million allowance this year, as only qualifying capital expenditure after the year-end will be subject to the AIA of £200,000. However, for businesses whose year-end falls after 31 December 2020, the position is more complex as the AIA limit is determined by the amount of time within the accounting period that falls into the 2020 calendar year. For businesses in this category and who are looking to make substantial capital expenditure in the near future it is crucial that the timing of these outlays are considered carefully and, where possible, incur this expenditure earlier, i.e. before 31 December 2020, to ensure the maximum AIA will be available. There are a number of additional complexities, such as where a company is part of a group, that will need to be taken into account, therefore please speak to your usual Whiting & Partners contact to discuss this matter further with regards to your specific circumstances.