THE FLA and the BVRLA have written jointly to the government to say the brief of its Super Deduction allowance doesn’t go far enough.

Both trade associations say that the Super Deduction should extend to leasing and plant hire.

Currently the Super Deduction can be used to purchase items such as new vans via contract purchase – see our analysis of the Budget: Budget boosts van purchase at expense of leasing – offering a 130% allowance.

However, the FLA and BVRVA says that businesses can’t afford to make large capital expenditures – particularly as we climb out of the pandemic downturn – and that leasing or short-term hire are particularly attractive routes to acquiring newer and more productive plant and machinery.

Both associations say that expanding the scope of Super Deduction to include leasing and plant hire would benefit a much broader range of businesses and stimulate growth across all sectors – “which is exactly what the recovery requires” according to a statement from the FLA.

The government’s decision to restrict the scope of the super deduction amounts to a serious missed opportunity to boost investment. The idea that businesses grow and become more productive by buying plant and machinery outright is out-dated. Leasing and hire make far more sense.

It preserves cash in the business and can avoid having expensive equipment that stands idle. Seventy per cent of construction plant and machinery is hired in for specific periods for this reason. Government support needs to be designed around the way business is actually done not around the way HMRC still thinks it is done.

Stephen Haddrill, director general, Finance & Leasing Association

Gerry Keaney, chief executive of the British Vehicle Rental and Leasing Association, added:

The government understands the important role that the vehicle leasing sector plays in delivering the UK’s road transport decarbonisation goals. This makes it all the more disappointing that leased vehicles have been omitted from the eligibility criteria of Super Deduction. This is a huge oversight, and an example of where the government has failed to align its fiscal and environmental policies.

An increasing number of individuals and businesses are turning to the leasing sector for cleaner vehicles, but the sector has not been immune to the impact of the Covid pandemic. With Clean Air Zones popping up around the UK, this is the perfect time to incentivise the uptake of low- and zero- emission vehicles and leasing enables businesses to keep their cash to help get them through the recovery period. Making leased vehicles eligible for Super Deduction would provide a boost to many businesses and would be a welcome shot in the arm for fleets.

Read the FLA and BVRLA joint briefing paper on Super Deduction

Download it from the FLA website here.

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