Take advantage of the Annual Investment Allowance (AIA)

Looking for a way to reduce your tax bill? Mystified by tax allowance rules? There’s a simple way you can pay less tax – while adding tangible assets to your business.

We understand tax allowance rules can be confusing. The Annual Investment Allowance (AIA for short) was introduced by HMRC in 2008.

It allows businesses to claim 100% tax relief on most purchases of plant and machinery (excluding cars but including all vehicles classed as commercial vehicles). The maximum amount you can claim in any one year is £50,000.

The AIA replaced the previous first year allowances which offered tax relief of 40% or 50% depending on the size of your business.

All businesses, from sole traders and partnerships through to the largest limited companies, are eligible for the £50,000 allowance.

The AIA is allowable on all eligible plant and equipment (excluding cars) up to a maximum of £50,000 in each tax year. Any expenditure over the £50,000 limit is dealt with under normal Writing Down Allowance rates or any special first year allowance rates that may apply.

You can use your AIA to purchase a van - new or used. Whether you buy outright or on Hire Purchase, it's still applicable. In fact, any interest paid is also a wholly allowable business expense.

Need to carry passengers as well as cargo? You can't use your AIA for car purchases, so instead of an estate car, have you thought about a Vito Dualiner? With seating for up to 5 passengers and ample load space in the back, it's a sound choice.

To take advantage of the AIA and other tax allowances it's important you choose the correct funding for your vehicle. At Mercedes-Benz CharterWay we realise that all businesses are unique and the great news is that we have a comprehensive range of purchase and lease products designed to aid cashflow and maximise any tax allowances.

So, all in all, this is a great year to buy a van. Save tax and drive your business forward with Mercedes-Benz.

If you use up your AIA in the current tax year, you can use the temporary first year allowance (FYA) to claim 40% tax relief on any qualifying purchases over the £50,000 AIA threshold. But hurry - the 40% allowance is due to end in April 2010.

Use our calculator to find out how much tax you could save this year. These tax advantages are only available until the end of March 2010. Act now so you don't miss out!

Click here to go straight to the Mercedes-Benz CharterWay tax savings calculator

Mercedes-Benz CharterWay is a trading name of Mercedes-Benz Financial Services UK Limited. Registered in England No 2472364. A Daimler Company. Registered Office: Burystead Court, Caldecotte Lake Drive, Caldecotte, Milton Keynes, MK7 8ND.