Annual Investment Allowance

Did you know that you can offset up to £100,000 in tax when investing in energy technology through the Government’s Annual Investment Allowance (AIA) scheme?

The AIA was introduced by the Government in 2008 to driving business growth. The scheme is a capital allowance incentive allowing your company to invest up to £500,000 in plant or machinery by the end of 2015 with the benefit of 100% corporation tax relief.

For example, if your company pays 20% corporation tax, you can offset up to £100,000 in tax on large investments in the first year.

Why use AIA for energy technology?

Many companies are unaware that renewable technologies, such as solar PV and LED lighting, can be purchased using your AIA.

A solar PV system will allow you to convert unused roof space into a micro generation plant for free green electricity for your company; reducing your energy bills and your carbon footprint. Once you combine all the different elements; the offsetting of up 20% of costs, energy bill savings and income from the government feed in tariff (for any excess electricity you produce) the move to solar PV makes sound business sense.

Solar PV AIA example

A company purchasing a solar PV system at a cost of £250,000 would be able to off-set £50,000 of the cost against pre-tax profits (assuming the company paid 20% corporation tax). In addition to the above, a typical 250 kWp system could generate around £20,000 in feed-in tariff payments each year, in addition to saving the same amount on energy bills if all generated electricity was used.

Find out more

To find out more about how your organisation can benefit from the AIA, contact your Chartered Accountants and Business Advisors to discuss your eligibility and how to apply.