Annual Investment Allowance Calculator
Calculate AIA tax relief on plant & machinery spending. 100% deduction on first £1M.
Last updated: April 2026 · Source: GOV.UK – Annual Investment Allowance
Tax Saving (year 1)
£9,500.00
Effective discount: 19% off purchase price
AIA Claimed (100%)
£50,000.00
WDA (18%)
£0.00
Total Relief
£50,000.00
AIA gives 100% tax relief on the first £1,000,000 of qualifying plant & machinery spending per year. Available to all businesses (sole traders and companies). Spending above £1M gets 18% WDA or Full Expensing (companies only).
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
The Annual Investment Allowance (AIA) provides a 100% first-year tax deduction on qualifying expenditure on plant and machinery, up to the current limit of £1,000,000 per year. The full cost of qualifying assets is deducted from your taxable profits in the year of purchase, rather than being spread over multiple years through writing down allowances. The AIA applies per business, not per asset, so a single £1M cap covers all qualifying purchases combined.
Qualifying expenditure includes most tangible assets used in the business such as machinery, tools, computers, office furniture, vans, and certain fixtures in buildings. Cars are excluded from AIA, as are assets given to the business or purchased for non-business use. Where expenditure exceeds the £1M annual limit, the excess is allocated to the main or special rate writing down allowance pool at 18% or 6% respectively.
For accounting periods that straddle two AIA limit periods or that are shorter or longer than 12 months, the allowance is proportionally adjusted. A 6-month accounting period would carry a £500,000 AIA limit. The deduction directly reduces your Corporation Tax or Income Tax bill by lowering the profit figure on which tax is computed.
AIA on £80,000 of equipment for a limited company
- A Ltd purchases £80,000 of qualifying machinery in the 2025/26 tax year.
- The full £80,000 falls within the £1,000,000 AIA limit, so 100% is deductible.
- Taxable profits before the purchase: £150,000.
- Taxable profits after AIA deduction: £150,000 − £80,000 = £70,000.
- Corporation Tax saved at 19% marginal rate: £70,000 tax vs £150,000 tax = £15,200 saving.
Frequently Asked Questions
- What does the Annual Investment Allowance Calculator do?
- Calculate AIA tax relief on plant & machinery spending. 100% deduction on first £1M. All calculations are performed in your browser using official UK rates and thresholds.
- Is this suitable for my business?
- This calculator provides general estimates based on standard UK business rates and rules. Every business is different — consult your accountant for advice specific to your circumstances.
- Does this use 2025/26 tax rates?
- Yes. All rates and thresholds are based on the current 2025/26 UK tax year. Corporation Tax main rate is 25% for profits over £250,000, with a 19% small profits rate.