Self Employed full 36 - Annual Investment Allowance

You can claim a capital allowance called an Annual Investment Allowance (AIA), if you bought equipment, but not cars. The annual amount of AIA you can claim is £1 million.

If your accounting period is different, longer or shorter than 12 months, or you have a different year end, more information can be found in Helpsheet 252 - Capital allowances and balancing charges.

Where you use an item of equipment for both business and private purposes, you must reduce the AIA claimed by the private use proportion.

Example

Gordon buys some tools for £5,000 and a van costing £10,000. As the total cost is less than Gordon's maximum AIA entitlement for the year, he might have been able to claim the full amount as AIA. However, although the tools are used only for the business, the van is used 60% for business and 40% for private motoring.

Because the van is used for private purposes, Gordon must restrict the amount of AIA that he claims on the van to reflect his private use. This means that the AIA he can claim for the van is £6,000, £10,000 less 40% private use.

His total AIA claim is £11,000, £5,000 for the tools plus £6,000 for the van.

If Gordon claimed AIA for items such as tools or a van and he later sells, disposes of, those items, he may need to pay back part of his allowance. This is a balancing charge.

Note: You cannot claim capital allowances if you claim the trading income allowance do not enter an amount here.