Annual Investment Allowance (AIA)

100% first-year tax deduction on the first £1 million of qualifying plant and machinery investment per year. Unlike Full Expensing, AIA is available to all business structures including sole traders, partnerships, and companies. Covers energy efficiency equipment, solar panels, heat pumps, EV chargers, and battery storage.

Funding Amount

100% deduction on first £1m per year (effective saving = cost × tax rate)

Deadline

Permanent — no expiry date

Eligibility Checklist

Any UK business (sole trader, partnership, or company)

Equipment must be 'plant and machinery'

Equipment must be new or second-hand (unlike Full Expensing)

Must be used for business purposes

Required Documents

1
Invoice and proof of purchase
2
Evidence equipment is used for business purposes
3
Tax return (corporation tax or self-assessment)
4
Asset register

Step-by-Step Application Process

Purchase qualifying plant and machinery

Keep all invoices and receipts

Add the asset to your business records

Claim through your annual tax return

Your accountant handles the deduction calculation

Key Conditions & Gotchas

!No formal application — claimed through tax return
!£1 million annual limit (shared if part of a group)
!Available to ALL business types (not just companies, unlike Full Expensing)
!Second-hand equipment qualifies (unlike Full Expensing)
!Cars are excluded from AIA
!Building fabric (walls, roof) does NOT qualify

Grant Stacking

Compatible with all direct grants. For companies, consider whether Full Expensing or AIA gives a better outcome. Sole traders and partnerships should use AIA as they cannot use Full Expensing.

Ready to Apply?

Visit the official application portal or book a free consultation with our team.

Official Portal