Asking 'when will our politicians stop fiddling about with the tax system' is a bit like asking 'when will the weather stop changing?' Despite their constant assurances that they wish to 'simplify' our tax system, our politicians seem incapable of stopping their incessant meddling and a state of constant change is something which we tax professionals have had to become accustomed to.

There is probably no better example of this constant meddling than in the case of capital allowances.

The Annual Investment Allowance ('AIA')
The AIA was introduced in 2008. Expenditure on qualifying plant and machinery up to the maximum amount of AIA for the relevant period is generally eligible for a 100% tax deduction. Hence, for example, a property investor who installs a new heating system into a rented commercial property would be able to claim an immediate 100% deduction for the cost of that new system up to the maximum amount of the AIA for the investor's accounting period (usually the year ended 5th April for individuals or partnerships, but varying considerably for companies).

But setting the maximum AIA is where the political meddling comes in. The maximum started out as £50,000, was increased to £100,000 in April 2010, reduced to £25,000 in April 2012, and has now been increased to £250,000 for the two year period from 1st January 2013 to 31st December 2014. It is then scheduled to reduce back down to just £25,000 from 1st January 2015.