Annual investment allowance (UK)
Annual investment allowance can give a 100% deduction for qualifying plant and machinery expenditure within the relevant limit. ACCA’s Finance Act 2025 article for TX-UK June 2026–June 2027 states a £1 million limit for a 12-month period, with proportional adjustment for a shorter or longer period; cars are excluded. Shared limits, expenditure eligibility, accounting basis and claim rules must be considered. Excess qualifying expenditure is dealt with under the applicable capital-allowance rules.
Worked example
For a 12-month exam period under the stated FA2025 rules, a sole qualifying business incurs £80,000 on eligible equipment, has its full allowance available and claims AIA. The deduction is £80,000, subject to the stated assumptions.
Common mistake
Claiming AIA on a car automatically, applying a full 12-month limit to a shorter period, or assuming each group member always has its own independent limit.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |