Currently this allowance enables fleets to write off expenditure up to £100,000 annually, but from April 1 2012 this allowance will drop to £25,000.
This means that the value of any vans (as well as qualifying plant and machinery) acquired each year up to the value of £25,000 can be fully written off against tax.
How the Annual Investment Allowance will work
All commercial vehicles are claimed at 20% p.a. on a reducing balance basis except for the tax year 2011/12, when 100% allowance can be claimed on the first £100,000 of expenditure. However, from April 2012 this will be reduced to the first £25,000 of expenditure.
Where a business has a chargeable period that spans the operative date of the decrease, the maximum allowance for that business's transitional chargeable period comprises two parts:
- the AIA entitlement, based on the previous £100,000 annual cap for the portion of a year falling before the relevant operative date.
- the AIA entitlement, based on the new £25,000 cap for the portion of a year falling on or after the relevant operative date.