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The Treasury has confirmed that the annual investment allowance (AIA), designed to stimulate investment in UK manufacturing, is to be extended further for an additional year in a bid to counter the current downturn in activity
Businesses, including manufacturing firms, can continue to claim up to £1m in same-year tax relief through the AIA for capital investments in plant and machinery assets until 1 January 2022.
The extension of the temporary £1m cap was originally due to revert to £200,000 on 1 January 2021.
Jesse Norman, financial secretary to the Treasury, said: ‘It is vital that we support business through the difficult months ahead.
‘Extending the AIA’s £1m cap will give businesses the confidence they need to invest into next year, helping them to grow whilst benefitting the wider economy too.’
The announcement will ensure that more investment can qualify and also that those investments which might not have made the year-end deadline, perhaps due to Covid or indeed Brexit constraints, will qualify, increasing the likelihood of them going ahead.
This will be particularly helpful for UK manufacturing at a time when, thanks to the announcement of a vaccine, business confidence is returning.
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