The Annual Investment Allowance (AIA) is a tax relief that allows businesses to claim 100% of the cost of qualifying equipment or machinery, up to an annual limit. This means you can deduct the entire amount from your profits in the year you buy it, rather than spreading the cost over several years. It covers items like computers, vehicles, and tools—but not cars.
The government can and does change the AIA limit, so it’s wise to check the current amount before making big purchases. Claiming the AIA can significantly reduce your taxable profits and, in turn, your tax bill.