McGills Chartered Accountants has urged companies to “take advantage” of the Annual Investment Allowance (AIA) before the allowance is scaled down from £1m per annum to its previous price of £200,000.
The price increase has been in effect since October 2018, however, starting from 1 January 2021 it will be decreased again.
The firm said by using the AIA, companies can claim the full cost of most qualifying plants and machinery when calculating corporation tax, reducing taxable profit and the amount of tax firms have to pay.
Sharla Dandy, partner at McGills Chartered Accountants said: “The reality for many businesses at the moment is that sources of funding, such as bank loans or other forms of finance, are in short supply due to the ongoing crisis that the UK faces, which is making lenders more cautious
“Tax reliefs such as the AIA are not reliant on a business’ credit score and are eligible to a wide variety of businesses where they have qualifying expenditure.”
She added: “For those businesses that are looking to diversify or pivot their business, this source of support could prove vital in helping them to invest in their future survival.
“The complexities of the scheme shouldn’t put businesses off making a claim, and that even in cases where a business’ year-end affected the amount that could be received, it may still be worthwhile seeking this tax relief.”