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Market News Lack of awareness for the increase in the Annual Investment Allowance

Editor: Steffen Donath

UK - A new survey has found that many manufacturing and engineering firms are not planning to take advantage of the increase of the Annual Investment Allowance (AIA).

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MTA CEO James Selka: “The increase to the Annual Investment Allowance is a great opportunity for UK manufacturing and engineering firms to invest in new equipment and embrace new technologies that could transform their businesses.”
MTA CEO James Selka: “The increase to the Annual Investment Allowance is a great opportunity for UK manufacturing and engineering firms to invest in new equipment and embrace new technologies that could transform their businesses.”
(Source: MTA)

From 1 January 2019 to 31 December 2020, a temporary increase in the AIA has been introduced by the UK government. This is to enable faster tax relief for plant and machinery investments between £200,000 and £1 million with the aim to help businesses to invest and grow.

However, the latest survey by the MTA and Close Brothers Asset Finance has found that despite the increase in AIA manufacturing and engineering firms are not changing their plans to invest in new equipment. The survey found that only 42% of engineering and manufacturing firms were aware that the Government had increased AIA.

The survey also found that only a minority of companies (40% overall, 45% in engineering/manufacturing) is planning to increase investment in 2019 as a result of the rise in the AIA. While that sounds like a reasonable rate, only 15% overall respondents and 16% of engineering and manufacturing companies were planning a significant increase, with 25% and 29% respectively saying it would only be a small increase on their original intentions.

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James Selka, CEO of the MTA, said: “The increase to the Annual Investment Allowance is a great opportunity for UK manufacturing and engineering firms to invest in new equipment and embrace new technologies that could transform their businesses. More needs to be done to get the message out there to invest and more support is needed to help stimulate these purchases.”

He added: “The MTA was pleased to see that the Budget included the expansion of the AIA from £200,000 to £1,000,000. This was a specific ‘ask’ from the MTA and will make investing in new equipment more cost-effective and give the UK the opportunity to be more competitive on an international stage. Now companies need to use this allowance and invest in their future.”

Steve Gee, CEO of Close Brothers Asset Finance's industrial equipment division said that the AIA is to help companies invest in their future. Close Brothers Asset Finance is at hand to support and guide companies through this process.

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