IDEAS home Printed from https://ideas.repec.org/p/btx/wpaper/1312.html
   My bibliography  Save this paper

Temporary Increase in Annual Investment Allowance: A 2013 Finance Act Note

Author

Listed:
  • Andrew Harper

    () (New Street Chambers, Leicester)

  • Li Liu

    () (Oxford University Centre for Business Taxation)

Abstract

In this Finance Act 2013 (FA 2013) note we review and discuss the implication of the temporarily increase in the level of the annual investment allowance (AIA) from £25,000 to £250,000 for expenditure incurred during the calendar years 2013 and 2014. We first review the provisions in detail, drawing attention to the potential for complexity in calculating the taxpayer's entitlement. We then discuss the investment incentive effects that may arise from the AIA increase, including a reduction in the user cost of capital and an increase in the additional cash available for investment. Our analysis of aggregate statistics on the population of AIA claimants in the UK between 2008-09 and 2011-12 suggests that the temporary AIA increase is likely to benefit only a narrow range of firms by providing them with a valuable windfall subsidy, resulting a sizable cost to the Exchequer.

Suggested Citation

  • Andrew Harper & Li Liu, 2013. "Temporary Increase in Annual Investment Allowance: A 2013 Finance Act Note," Working Papers 1312, Oxford University Centre for Business Taxation.
  • Handle: RePEc:btx:wpaper:1312
    as

    Download full text from publisher

    File URL: http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/Series_13/WP1312.pdf
    Download Restriction: no

    More about this item

    Keywords

    AIA Allowances; Corporate Investment;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:btx:wpaper:1312. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dongxian Guo). General contact details of provider: http://edirc.repec.org/data/sbsoxuk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.