Annual Investment Allowance Calculator
Calculate your Corporation Tax saving from capital expenditure. See how the £1,000,000 AIA reduces your tax bill.
Updated for 2025/26 tax year
Capital Expenditure
Total spend on plant, machinery, and equipment
Your company's taxable profit before AIA deduction
AIA limit is reduced for short accounting periods
Quick amounts:
Tax Saving
Marginal Relief Band
Your profits fall in the marginal relief band, where the effective rate on additional profits is 26.5%. This means capital allowances are even more valuable - each £1 of AIA saves you 26.5p in tax, not just 25p.
Track Capital Allowances Automatically
AccountsOS identifies qualifying purchases and calculates your AIA relief in real-time. Never miss a capital allowances claim again.
Get Started FreeUnderstanding the Annual Investment Allowance (AIA)
The Annual Investment Allowance is one of the most powerful tax reliefs available to UK businesses. It allows you to deduct 100% of qualifying capital expenditure from your taxable profits in the year of purchase, providing immediate tax relief rather than spreading it over several years.
Current AIA Limit: £1,000,000
The permanent AIA limit is £1,000,000 per year. This applies to most plant and machinery purchases including:
- Business equipment — Computers, printers, phones, furniture
- Machinery — Manufacturing equipment, tools, workshop machinery
- Vehicles — Vans, lorries, motorcycles (not cars)
- Fixtures — Fitted kitchens, bathroom suites, security systems
How Corporation Tax Rates Affect Your Saving
Your tax saving depends on which Corporation Tax band you fall into:
- Under £50k profit: 19% saving (£1 AIA = 19p tax saved)
- £50k-£250k profit: 26.5% marginal saving (most tax-efficient!)
- Over £250k profit: 25% saving (£1 AIA = 25p tax saved)
Companies in the marginal relief band (£50k-£250k) actually benefit most from capital allowances because the marginal rate of 26.5% exceeds the main rate of 25%.
Timing Considerations
AIA relief is based on when you incur the expenditure, not when you pay. For tax planning:
- Bring forward purchases to claim relief earlier
- Consider accounting period length (AIA is prorated for short periods)
- Plan major purchases around year-ends to maximize cash flow
- Review qualifying expenditure before your year-end
What Doesn't Qualify for AIA?
Some assets cannot be claimed under AIA:
- Cars — Subject to separate capital allowance rules based on CO2 emissions
- Buildings and land — May qualify for Structures and Buildings Allowance instead
- Leased assets — Only purchased assets qualify
- Items for resale — Stock and inventory are revenue costs, not capital
Disclaimer: This calculator provides estimates for illustrative purposes. Tax rules are complex and change regularly. Always consult a qualified accountant for advice specific to your circumstances.