The current allowance allows farmers to claim up to £1 million per year against their profits, but from January 1 this allowance is reducing to £200,000 per year.
Therefore, total allowances for the March 31, 2022, year are £800,000, but £750,000 of this needs to be used before the change on December 31, 2021.
If farmers are considering purchasing assets with a cost of more than £50,000 after December 31 and have unused AIA available at this date it may be beneficial to bring the purchase forward to before December 31 to obtain maximum benefit from the allowances available.
Please do however watch this space as there is a Budget on October 27 – so things may change.
Claire Smith, Client Success Manager, WR Partners