United Kingdom Annual Investment Allowance: qualifying items
Annual Investment Allowance permits a deduction for qualifying plant and machinery. The headline amount is separate from asset exclusions, accounting-period adjustments and shared allowances.
On this page
- Allowance amount
- £1 million; accounting-period and sharing rules can change the available amount.
- Qualifying category
- Most plant and machinery.
- Excluded assets
- Business cars, items owned for another reason before business use and gifts.
Amount and qualifying spending
HMRC publishes an Annual Investment Allowance amount of £1 million. HMRC, Annual Investment Allowance (opens in a new tab).
The full value of a qualifying item can be deducted from profits before tax, up to the available allowance. Most plant and machinery qualifies. HMRC, Annual Investment Allowance (opens in a new tab).
Excluded items and timing
Business cars, items owned for another reason before business use, and items given to the business do not qualify for this allowance. A claim is available only in the period the item was bought. Items bought in the final accounting period when a business closes are excluded. HMRC, Annual Investment Allowance (opens in a new tab).
A sole trader or partnership cannot claim the full value of an item also used outside the business: the claim is reduced for that use. Selling an item after claiming the allowance may give rise to tax. HMRC, Annual Investment Allowance (opens in a new tab).
Accounting periods and shared allowances
A new allowance applies for each accounting period. The allowance must be adjusted where the period is more or less than 12 months. Partnerships qualify only where all members are individuals. HMRC, Annual Investment Allowance (opens in a new tab).
Limited companies controlled by the same person share one allowance. Sole traders or partnerships with several businesses normally have an allowance for each, but share one where the businesses are controlled by the same person and occupy the same premises or have similar activities. HMRC, Annual Investment Allowance (opens in a new tab).
Scope
This is general information adapted from HMRC material under the Open Government Licence v3.0, without endorsement. It does not classify a particular asset, calculate tax relief or compare allowance choices. No matching calculator or worked example is available here.