Research carried out by banking group Close Brothers has suggested that almost two thirds of UK small businesses are 'unaware of the Annual Investment Allowance' (AIA).
The majority of businesses are able to claim a 100% AIA on the first portion of expenditure on most types of plant and machinery (except cars). The AIA applies to businesses of any size and most business structures, but there are provisions to prevent multiple claims.
The maximum amount of the AIA depends on the date of the accounting period and the date of expenditure. From 1 January 2019, the AIA is £1 million for two years. Thereafter, it will revert to £200,000.
The research also revealed that 58% of small and medium-sized enterprises (SMEs) were unaware that the government increased the AIA in the 2018 Autumn Budget. Meanwhile, just 13% of firms stated that they plan to increase investment in 2019 in order to take advantage of the rise.
Commenting on the matter, Neil Davies, CEO of Close Brothers, said: 'The AIA provides significantly faster tax relief for plant and machinery. However, it's clear that more needs to be done to get the message out to business owners because the AIA was always intended as an economic stimulus by the government.'