£1m annual investment allowance extended until 2022

The £1m annual investment allowance (AIA) is being extended for a year to promote business confidence and encourage investment.

This means farm businesses can continue to claim up to £1m in same-year tax relief for capital investment in plant and machinery until 1 January 2022.

The £1m cap, introduced as a temporary measure from January 2019, was due to revert to £200,000 on 1 January 2021.

See also: Five year averaging proving more beneficial than expected

The AIA can be claimed by sole proprietors, corporations and partnerships, although in the case of partnerships, the members must be individuals.

Advisers have welcomed the move, but cautioned not to let tax incentives drive spending decisions.

It is also important when getting quotes for building work to ensure that fixtures and fittings which may qualify for AIA are detailed so that the relief can be claimed on those too.     

At the same time, the government also announced a consultation on a proposal to require tax advisers to hold professional indemnity insurance.

Draft legislation for a plastic packaging tax, announced originally in the 2018 Budget, will also be introduced.

This tax will be £200/t for plastic packaging that contains less than 30% recycled plastic and will come into effect from April 2022.