Temporary Increase in Annual Investment Allowance: A 2013 Finance Act Note
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.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +44 (0)1865 288800
Fax: +44 (0)1865 288805
Web page: http://www.sbs.ox.ac.uk/ideas-impact/tax/
More information through EDIRC
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)
If references are entirely missing, you can add them using this form.