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Definition
The annual investment allowance is a form of capital allowance that permits a business to deduct 100% of the cost of qualifying plant and machinery from its taxable profit in the year of acquisition, up to an annual cap, rather than spreading it over years.
In plain terms
Buy qualifying kit and, within the limit, the whole cost cuts your taxable profit straight away — a big, immediate tax saving on investment.
Why it matters for your company
The AIA makes investing in equipment more attractive, and financing it can let you claim the relief while spreading the cash cost. See asset finance.
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