Lack of knowledge about Annual Investment Allowance increase among UK SME’s, finds Close Brothers Research
Despite a temporary two-year boost in the Annual Investment Allowance (AIA), research from Close Brothers Asset Finance has found that UK SMEs have no firm plans to take advantage of the increase.
From 1st January 2019 to 31st December 2020, an increase in the AIA has been introduced by the Government, to enable faster tax relief for plant and machinery investments between £200,000 and £1 million, with the aim of helping business to invest and grow.
Introduced in 2008, it is an allowance for tools and equipment meaning a business can write of 100 per cent of qualifying capital expenditure against taxable profits for the same period.
A key finding of the survey established that 58 per cent of SMEs aren’t aware that the Government had made the increase to the AIA, while only 13 per cent of companies are planning to significantly increase investment in 2019 as a result of the rise.
Neil Davies, CEO at Close Brothers Asset Finance, said: “The AIA provides significantly faster tax relief for plant and machinery and is a great way for firms to invest in the tools and equipment that could transform their business.”
“A knock-on effect of this lack of knowledge is that company owners aren’t taking advantage of the increase to invest in their business.”