CT600 Box 690: Annual Investment Allowance (AIA) Explained

When your company buys equipment or machinery for use in the business, you can usually claim Annual Investment Allowance (AIA) — a capital allowance that lets you deduct the full purchase cost from your taxable profits in the year of purchase. Box 690 on the CT600 company tax return is where this amount is reported.

This guide explains how AIA works, what qualifies, the current £1 million limit, how it interacts with your corporation tax calculation, and what to enter in Box 690.

What Is Annual Investment Allowance?

Annual Investment Allowance (AIA) is a first-year capital allowance that gives 100% tax relief on qualifying plant and machinery in the same accounting period you bought it. Rather than spreading the tax deduction over many years through writing down allowances, AIA lets you offset the full cost immediately.

For example: your company buys a new piece of workshop machinery for £30,000. Without AIA, you might claim 18% writing down allowance — £5,400 in year one. With AIA, you claim the full £30,000 against profits in the same year, saving up to £7,500 in corporation tax at the 25% rate.

The current AIA limit is £1,000,000 per year (for a 12-month accounting period). This limit has been in place permanently since 1 January 2019. For most small and medium-sized companies, this limit is more than sufficient to cover all capital expenditure.

Source: Annual Investment Allowance — GOV.UK

What Qualifies for AIA?

AIA can be claimed on most plant and machinery your company purchases for business use. Common qualifying assets include:

Office equipment — computers, printers, photocopiers
Machinery and tools — manufacturing equipment, power tools, specialist instruments
Commercial vehicles — vans, lorries, and other non-passenger vehicles
Fixtures and fittings — shelving, partitioning, integral features such as air conditioning or heating systems in business premises
IT equipment and servers — on-premise hardware

What Does Not Qualify

Some expenditure is excluded from AIA:

Business cars — these use writing down allowances at 18% (or 6% for high-emission vehicles), or a 100% first-year allowance for zero-emission electric vehicles
Items gifted to the company rather than purchased
Assets previously owned by the business owner for personal use before being introduced into the business

The £1 Million Limit and Short Accounting Periods

The AIA limit is £1,000,000 for a full 12-month accounting period. If your accounting period is shorter, the limit is reduced proportionally.

Formula: £1,000,000 × (months in period ÷ 12)

Example: A company with a 9-month first accounting period has an AIA limit of:

£1,000,000 × 9/12 = £750,000

This commonly affects newly incorporated companies, whose first accounting period often runs from the date of incorporation to a convenient year-end date — sometimes only 7–11 months.

Connected Businesses

If your company has connected businesses under common control, all connected companies share a single AIA limit between them. They do not each receive the full £1 million independently. This is worth considering if your group structure involves multiple entities making capital purchases in the same period.

How AIA Reduces Your Corporation Tax

AIA is a deduction from your adjusted trading profit — the figure on which corporation tax is calculated. The example below shows the direct tax saving:

	Without AIA	With AIA
Trading profit	£150,000	£150,000
AIA claimed	£0	£60,000
Adjusted trading profit	£150,000	£90,000
Corporation tax at 25%	£37,500	£22,500
Tax saving	—	£15,000

AIA effectively turns capital expenditure into an immediate corporation tax deduction. At the 25% main rate, each £1 of AIA saves £0.25 in tax.

What Goes in CT600 Box 690?

Box 690 reports the Annual Investment Allowance claimed and included in the tax calculation for the accounting period.

This figure comes from your capital allowances computation — a schedule listing each qualifying asset, its cost, and the allowance claimed. Box 690 should match the AIA line in your capital allowances schedule.

In TinyTax, the Annual Investment Allowance field feeds directly into Box 690 and is included automatically in the corporation tax calculation. Entering your AIA reduces your adjusted trading profit (Box 235) and therefore your corporation tax liability.

AIA and the Capital Allowances Pages (CT600A)

Box 690 specifically covers AIA on the main CT600 form. Other capital allowances — writing down allowances, structures and buildings allowances, first-year allowances for electric vehicles — are reported on the supplementary CT600A pages.

For most small limited companies, AIA covers the majority of capital expenditure, making Box 690 the primary capital allowances figure on the main CT600.

AIA vs Writing Down Allowances

When you buy plant and machinery, you typically have a choice between claiming AIA (100% immediately) or adding the asset to a capital allowances pool and claiming writing down allowances (WDA) over time.

	AIA	Writing Down Allowance
Relief rate	100% immediately	18% or 6% per year
Annual limit	£1,000,000	No limit
Best for	Most purchases	Cars, long-life assets

AIA is almost always preferable where available — the immediate full deduction beats a slow write-down, both for simplicity and for cash flow. The main exception is business cars, which are excluded from AIA entirely.

Common Questions About Box 690

When must I claim AIA?

You must claim AIA in the accounting period in which you purchased the asset. Unlike some other reliefs, you cannot carry AIA forward to claim in a later period. If you miss the claim, you may be able to amend your return within the two-year amendment window.

Can I claim AIA if it creates a trading loss?

Yes. If your AIA claim exceeds your taxable profits and creates a trading loss, you can carry that loss forward against future profits or claim other loss reliefs. There is no restriction on claiming AIA even if it generates a loss.

What if my capital spend exceeds the £1 million limit?

If your capital expenditure exceeds the AIA limit, the excess qualifies for writing down allowances at 18% (or 6% for long-life assets). You claim the full £1 million in AIA and add the remainder to the relevant pool.

Does AIA apply to second-hand assets?

Generally yes — AIA applies to second-hand plant and machinery bought for business use, provided you were not the previous owner. You cannot claim AIA on assets you previously owned personally before introducing them into the business.

How does AIA relate to turnover (Box 145)?

AIA and Box 145 (Turnover) are separate figures on the CT600. Turnover is your income; AIA is a deduction from profit. They work together through the profit calculation — higher turnover with a large AIA claim can still result in a modest tax bill if the capital expenditure is significant.

Summary

Box 690 on the CT600 reports the Annual Investment Allowance claimed on qualifying plant and machinery. The current AIA limit is £1,000,000 per year, providing 100% immediate corporation tax relief on most business equipment purchases.

For most small limited companies, AIA is the primary way to reduce corporation tax through capital investment. Understanding how it feeds into your adjusted trading profit is key to accurate CT600 completion.

CT600 Box 690: AIA Claimed