What is the cap on the annual investment allowance for qualifying plant and machinery?

The annual investment allowance (AIA) for qualifying plant and machinery allows businesses to claim a full deduction for their capital expenditures, up to a specified limit. As of the current regulations, the cap on the AIA is indeed set at £1,000,000. This means businesses can invest in plant and machinery and claim up to £1,000,000 against their taxable profits in a single tax year.

This allowance is particularly beneficial for small to medium-sized enterprises (SMEs) as it encourages capital investment by providing an immediate tax benefit rather than spreading the claim over several years through writing down allowances. Moreover, it's important to remember that this limit is subject to change based on government fiscal policy and annual budget announcements, so staying updated with recent legislation is essential for accurate tax planning.

The other figures presented do not reflect the current cap on the AIA and may mislead businesses about their potential deductions.