We sat down with Anastasiya Kokonova MRICS, who is a Capital Allowances Partner at RCK Partners, to explore one of the most valuable tax reliefs available to UK businesses: the Annual Investment Allowance (AIA).
The AIA allows businesses to claim 100% tax relief on qualifying plant and machinery expenditure incurred in the year, up to the current annual limit of £1m. This means that, instead of gradually claiming tax relief over many years, a business can offset the full cost immediately against taxable profits.
AIA is available to most businesses and applies to items such as fixtures, equipment, machinery, and integral features within commercial property. It is particularly useful for property acquisitions and refurbishment projects.
Anastasiya is a Chartered Quantity Surveyor with 15 years of experience in the Capital Allowances sector. Prior to specialising in Capital Allowances, Anastasiya has worked as a Quantity Surveyor for 3 years for a large QS firm where she has gained experience in both new build and fit out projects. Anastasiya has provided Capital Allowances advice and undertaken claims on hundreds of properties and commercial transactions and has advised a wide variety of property investors across different sectors including high net-worth individuals, hoteliers, retailers, media and investment companies and owner occupiers. Anastasiya holds a Masters Degree in Corporate Real Estate Finance and Strategy.
Most plant and machinery used for business purposes, including fixtures within commercial property (such as electrical systems, heating, sanitary ware, lifts, air conditioning), equipment, and machinery.
Land and buildings themselves do not qualify, nor do structural works, dwelling houses, or cars. Additionally, certain assets purchased from connected parties may be excluded.
The current AIA limit remains £1 million per year and is set at this level going into 2026, unless future Budgets introduce changes.
Most UK businesses can claim AIA, including limited companies, sole traders, and partnerships. Mixed partnerships (with corporate members) have restrictions, and it is not available for certain leasing activities.
AIA gives 100% relief in year one (up to the annual limit). Other allowances, such as Writing Down Allowances (WDA), provide relief gradually over time (e.g. 6% or 18% per annum on a reducing balance basis).
It reduces taxable profits in the year of purchase. Lower taxable profits mean less corporation tax will be payable for that year.
· If a company incurs £750k of qualifying expenditure and claims AIA in full, taxable profits are reduced by £750k.
· At a 25% corporation tax rate, this results in a tax saving of £187,500 in that year.
In short, yes. AIA can be used first (often for integral features or special-rate assets), with Full Expensing applying to qualifying new main-rate plant and machinery. The two regimes can operate alongside each other depending on asset type.
AIA is considered one of the most valuable capital allowances as it provides immediate 100% tax relief, significantly improving cash flow and accelerating tax savings, particularly on property acquisitions and refurbishment projects.
The Annual Investment Allowance continues to play a vital role in helping UK businesses invest in capital expenditure. Due to it’s ability to claim 100% relief, AIA offers an opportunity to accelerate returns on investment, particularly for those undertaking property acquisitions or refurbishment projects.
We encourage businesses to start a conversation around AIA and whether it is being fully utilised. At RCK Partners, we would be happy to support further discussions around how AIA and other capital allowances may apply.
For more information or to continue the conversation, click here.
RCK's Innovation Advisory Council (IAC) member, Carla Stent, shares leadership lessons from her time as COO at the Virgin Group and from her interaction with Nelson Mandela.
Hear from RCK’s Strategic Advisor, MB Christie, as she shares a key leadership lesson that has shaped her career. MB explores how each stage of a company’s growth requires a different kind of leader to guide it forward successfully.
RCK Partners, a specialist tax advisory firm focusing on R&D Tax Credits, Business Rates and Capital Allowances, today announces the launch of its Innovation Advisory Council (“IAC”).
)%20(5).png)