Annual investment allowance

The business annual investment allowance, according to Her Majesty's Revenue and Customs the capital allowance granted for business assets, but not vehicles, during the tax year, with a maximum.

E.G., accounting year 2011-2012 granted an business annual investment allowance of 25 grand. The gov of the UK made an announcement that an increase of the hmrc annual investment allowance, up to 250 thousand pounds for 2 full years from Jan '13.

For April to April 2012-2013, there are two parts of the calculation of your AIA:

(1) your entitlement up to 1-1-2013 is the annual cap - £25k, but only for first 3/4 of the year.

2) the quota beyond 1-Jan 2013 and before the tax year end, based on the new limit, 6 figures, 250,000 pounds.

Using simple maths: you multiply three quarters x twenty five thousand pounds in other words, eighteen thousands seven hundred and fifty pounds for the first three quarters of the financial year April 2012-April 2013.

Subsequently, calculate 1/4 by your £250k, which works out as £62.5k.

So, the maximum tax relief allowance on property for April 12-13 comes to £81.25k. However, a max of £18,750 (or £25,000) is allowed to be claimed for the period leading up to the last quarter of the financial year (that is April 2012- January 2013).

If the purchases were bought after 1-1-13, a max of £62,500 can be claimed for this part, alternatively if the full £25,000 was claimed for the earlier period, £56,250. The latter, £56,250 is the £62,500 less the difference between £25,000 and £18,750.

Private use proportion needs to be applied if for both private and business use, thus that just claims for business use can be recorded under such expenditure under the hmrc annual investment allowance rules.

Source: stocks shares isa allowance