AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
The Annual Investment Allowance lets a UK company deduct the full cost of most plant and machinery from its profits before tax, up to £1 million per 12-month accounting period. Business cars do not qualify, nor do items you owned before putting them into the business or items given to you, and the limit is cut in proportion for a shorter first period.
A new company usually spends before it earns: a laptop and phone, a commercial oven, a sewing machine, shelving for a shop. The Annual Investment Allowance (AIA) decides how quickly that spending reduces the company's Corporation Tax. For most small companies the answer is: all of it, in the year you buy it.
What the allowance does
Ordinarily, the cost of equipment is not deducted in one go like rent or wages. It goes through the capital allowances system. The AIA, as GOV.UK describes it, lets you deduct the full value of a qualifying item from your profits before tax, up to the limit. The limit is £1 million per accounting period.
GOV.UK notes that the AIA has changed several times since April 2008, and that if it changed during your accounting period you must adjust your claim. The £1 million figure is the one on GOV.UK's page as at October 2026.
What qualifies and what does not
Most plant and machinery qualifies. That covers the equipment a small business actually buys:
- Computers, phones, printers and other office equipment.
- Kitchen and catering equipment such as ovens, fridges and mixers.
- Tools, machines and workshop equipment.
GOV.UK lists three exclusions:
- Business cars. These go through writing down allowances instead.
- Items you owned for another reason before you started using them in the business. Your personal laptop, moved into the company, is not an AIA purchase.
- Items given to you or your business.
Worked example: a first-year catering company
Example only. A company buys a commercial oven, a chest freezer and a laptop for £12,000 in total, and makes £40,000 of profit before capital allowances in a 12-month period.
| Without AIA | With AIA | |
|---|---|---|
| Profit before capital allowances | £40,000 | £40,000 |
| AIA deduction | £0 | £12,000 |
| Taxable profit | £40,000 | £28,000 |
| Corporation Tax at 19% | £7,600 | £5,320 |
The allowance brings forward £2,280 of tax relief into the first year (£7,600 − £5,320). Without it, the company would still get relief over time through writing down allowances; the AIA changes the timing. The 19% small profits rate applies below £50,000 of profit; a company inside the marginal band saves more per pound, as explained in marginal relief for small companies.
Rules that change the amount
A short first accounting period
The limit is proportionate to the period's length. GOV.UK's example is a nine-month period, which gets 9/12 × £1,000,000 = £750,000. Periods longer than 18 months, and gaps or overlaps between periods, follow different rules.
When the purchase counts
The AIA can only be claimed in the period the item was bought. GOV.UK treats the purchase date as the date the contract is signed if payment is due within four months, or the payment due date if it is due more than four months later. For hire purchase, you can claim on all the contract payments once you start using the item, but not on the interest.
More than one company
Two or more limited companies controlled by the same person share a single AIA and choose how to split it. If you run a trading company and a separate company for another venture, they do not get £1 million each.
Spending above the limit, or choosing not to use it all
Spending over the limit can go into first-year allowances or writing down allowances, and one item can be split between them. You can also claim writing down allowances instead of the AIA, or split the cost, which some companies do when profit is low and a full deduction would only create a loss.
Closing the business
If the business closes, the AIA cannot be claimed on items bought in the final period; a balancing charge or allowance goes on the return instead. That matters to founders planning to close a UK company before moving to Nigeria.
Steps
- Keep the invoice and proof of payment for every equipment purchase, in the company's name.
- Note the contract and payment dates, which fix the period of the claim.
- Separate cars from other equipment, since cars are excluded.
- Claim the AIA in the company's Corporation Tax return for that period.
- If you control another company, agree how the single allowance is split.
This is general information about how the allowance works, not tax advice for your company.
Where Pryme fits
Equipment for a UK company is often bought from abroad or paid for in more than one currency. A Pryme Business Account holds GBP, NGN, USD and EUR with local details; Swap shows the rate first and the fee on its own line before you approve. Any customer can generate a verifiable receipt or statement through Pryme's partnership with VerifyDoc.ai, which helps when you file the purchase evidence (/p/receipts, /p/b-swap).
Questions people ask
How much is the Annual Investment Allowance in 2026?
GOV.UK gives £1 million per accounting period as at October 2026, reduced in proportion for periods shorter than 12 months.
Can I claim AIA on a car bought by my company?
No. GOV.UK excludes business cars; they get writing down allowances instead.
Can I put my own laptop into the company and claim AIA?
Not under the AIA. Items you owned for another reason before using them in the business are excluded.
Does AIA apply to equipment on hire purchase?
Yes, once you start using the item you can claim on all the contract payments, but not on the interest.
Sources
- GOV.UK: Capital allowances: Annual Investment Allowance · accessed Oct 2026
- GOV.UK: Rates and allowances: Corporation Tax (updated 1 Apr 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.