Explore commonly used personal finance terms.
The Annual Investment Allowance (AIA) is a tax deduction available to businesses for qualifying capital expenditures on items like machinery or equipment. By allowing companies to deduct the full cost of eligible investments in the year they are purchased, AIA encourages businesses to reinvest in operational assets. This allowance is particularly beneficial for small and medium-sized enterprises, as it reduces taxable income and improves cash flow, making it easier to finance growth and expansion through capital investments.
