Presently anyone who buys assets that they keep to use for their business can deduct some or all of the value of the item from their business profits before they pay tax.
The AIA figure currently stands at £500,000 but from 1 January 2016 will fall significantly, to just £25,000. The Chancellor of the Exchequer’s stance on this dramatic fall in the threshold was not confirmed in last week’s Budget.
Those wanting to make the most of the current allowance are now being advised to act before it’s too late.
Philip Cowen, Head of Rural at Bruton Knowles said: “We’re now entering the last chance saloon for those looking to make the most of the current AIA rules so they need to plan now before the new deadline comes into play.
“It applies to the purchase of what is described as plant and machinery and includes cars, the demolition of plant and machinery, fixtures, integral features and alterations to a building to install other plant and machinery.
“This change in rules could also have a significant impact on the profit margins of many farmers.
“With commodity prices reasonably low at present, many businesses may struggle with cashflow if they are paying tax on higher levels of profit from previous trading periods.
“The current rules allow farmers to invest in essential plant and machinery, which is vital for them to maintain current yields and operational performance.
“The change in allowance levels will impact on the upgrading of new plant as well as future maintenance expenditure of plant and machinery, and therefore we strongly urge those considering investing in new plant to do so now and to seek advice on what they can invest in both now and the future.
“We represent many famers and agricultural businesses and the worst thing to do would be to let this opportunity slip by without detailed thought.
“As every business is different, we advise farmers and rural businesses to get in touch so that we can guide them through what might or might not qualify, alongside some possibilities for funding such investment, to make sure that individual businesses maximise the current allowance levels before it’s too late.”