| Annual investment allowance increased and extended The annual investment allowance (AIA), the 100% allowance for capital expenditure, has seen a number of changes since its introduction in April 2008, the most recent of which being an increase in the maximum annual claim from £25,000 to £250,000 for the two years from 1 January 2013 to 31 December 2014. It has now been announced that, with effect from 1 April 2014 for corporation tax and 6 April 2014 for income tax, the AIA will be doubled to £500,000 until 31 December 2015, when it will return to £25,000. As with previous changes in the amount of the AIA, there will be transitional provisions for accounting periods spanning the date of the change and care will need to be taken to ensure claims for the allowance are maximised. Enhanced capital allowances extended Enhanced capital allowances (100% first year allowance) apply to capital expenditure on plant and machinery within two schemes: energy-saving technologies and water efficient technologies. The list of technologies qualifying under the energy-saving scheme is to be extended to include active chilled beams and desiccant air dryers with energy saving controls. The qualifying criteria for a number of technologies currently within the energy-saving scheme will also be revised. Clarification will be made to the qualifying criteria for a number of technologies within the water efficient scheme following changes in technical standards, primarily in respect of efficient washing machines. Enterprise Zones – extension for enhanced capital allowances Companies are able to claim a 100% first year allowance on new plant and machinery acquired for use in designated sites within Enterprise Zones. These enhanced capital allowances were due to end on 31 March 2017, and it has now been announced that this will be extended until 31 March 2020. Business Premises Renovation Allowances Amendments will be made to the rules for Business Premises Renovation Allowances to clarify the type of expenditure that qualifies for the relief. With effect from 1 April 2014 for corporation tax and 6 April 2014 for income tax, the following will apply: - Only the actual costs of construction and building work, and certain specified activities will qualify for the relief.
- Associated activities that qualify for the relief will be limited to 5% of the actual costs as newly specified.
- Claims for allowances will be prevented where another form of State Aid has been or will be received by the claimant.
- Plant and machinery qualifying for the relief will be limited to integral features and other specific items.
- Where relief is claimed on expenditure incurred in advance of the work being completed, that work must be completed within 36 months to avoid a withdrawal of the relief.
- The period in which a balancing adjustment must be made in respect of certain events will be reduced from seven years to five.
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