Annual Investment Allowance (AIA) Calculator, 2026/27

How this is calculated

The Annual Investment Allowance gives a 100% deduction for qualifying capital expenditure up to £1,000,000 per year. This calculator compares your qualifying spend against that limit, divided by the number of associated companies, since the AIA is one shared pot rather than one per company.

Spend within the limit is deducted from profit in full for the period it is incurred. Anything above the limit falls into the main capital allowances pool and is written down at 18% a year on a reducing balance basis, so it takes many years to relieve fully rather than being deducted immediately.

The tax saving is worked out by running corporation tax on your profit before and after the allowance, using the 19% small profits rate, 25% main rate and marginal relief in between, so the figure reflects the actual marginal rate your company faces rather than a flat assumption.

What counts as qualifying expenditure

Most plant and machinery qualifies, including tools, office equipment, computers, vans and integral building features such as heating and electrical systems. Cars do not qualify for the AIA regardless of emissions, though zero-emission cars can qualify for a separate 100% first year allowance.

Assets bought on hire purchase generally qualify for the AIA in the period you start using them, even though you have not yet paid the full price, provided the agreement transfers ownership eventually. Leased assets you do not own do not qualify.

Timing and practical points

Because the allowance is a per-period limit rather than an annual cash cap that carries over, spend that falls just after your year end effectively waits a full accounting period before it can be relieved, so timing large purchases around your year end can matter for cash flow.

Where a group has several associated companies, the shared £1m limit is usually allocated by agreement between the companies, so groups planning significant capital spend should decide in advance which company will claim.

Does the Annual Investment Allowance apply to cars?

No. Cars are specifically excluded from the AIA. They instead qualify for writing down allowances based on CO2 emissions, though fully electric cars can qualify for a 100% first year allowance under separate rules.

Can I carry forward unused AIA to next year?

No, unused AIA does not carry forward. If you do not use the full limit in a period, the balance is simply lost; any qualifying spend still gets relief eventually, but only via the slower writing down allowances.

Is the £1m limit per company or per group?

It is a single shared limit for a group of associated companies under common control, not £1m per company. The companies agree between themselves how to allocate the shared allowance.

What happens to spend above the AIA limit?

Excess spend goes into the main rate pool (or special rate pool for certain assets) and is relieved gradually through writing down allowances, currently 18% a year on a reducing balance for the main pool.