The annual investment allowance (AIA) is a tax relief that allows businesses to claim a 100% tax deduction for certain types of capital expenditure, such as machinery and equipment. The AIA is intended to encourage businesses to invest in new equipment and technology by allowing them to write off the cost of these investments against their taxable profits.

The amount of the AIA is set by the government and is subject to change. Currently, the AIA is £1 million per year, (extended to 31st March 2023) which means that businesses can claim a tax deduction of up to £1 million per year for eligible capital expenditures. Any capital expenditure over this amount may be claimed as writing down allowance (WDA) at a lower rate.

The AIA is available to most businesses in the UK, including sole traders, partnerships, and limited companies.