THE Chancellor’s Super Deduction allowance, offering a 130% first year allowance for main pool expenditure incurred up to April 2023, needs to be rethought to include leasing.
That’s the view of the the BVRLA and six other leading trade associations who have collectively written to the Chancellor, urging him to modernise the way Government uses tax incentives to drive business investment in new commercial vehicles and equipment.
The associations are concerned that the eligibility criteria for the 130% super deduction allowance (SDA), introduced in the Spring Budget, fail to include leasing and short-term hire – two of the most common ways that businesses acquire new plant and machinery. This means that only businesses that purchase new commercial vehicles or equipment can access the allowance – despite the fact that thousands of companies rely on leasing and rental to finance these acquisitions.
For the commercial vehicle sector, 1-in-5 trucks and 1-in-6 vans on UK roads are rented or leased.
Gerry Keaney, chief executive officer of the British Vehicle Rental & Leasing Association, said:
“With the UK economy still emerging from the impact of the COVID pandemic, the Government is urging fleets to spend billions of pounds on new ultra-low emission commercial vehicles.
“A huge proportion of this investment will be made through vehicle leasing and rental, which provides businesses with the fixed cost and flexibility they need to continue decarbonising.
“The eligibility restrictions on the super deduction mean that this tax incentive is not open to business for whom leasing or rental are the best options,” added Keaney.
“The Government must move with the times and use investment incentives that support all the acquisition methods modern businesses rely on.”
A range of industry bodies from across the tax, logistics, construction, manufacturing and small businesses sectors have called for the extension of the SDA criteria to include short-term hire and leasing:
- Finance and Leasing Association
- Civil Engineering Contractors Associatio
- Forum of Private Business
- Logistics UK
- Manufacturing Technologies Association
- Association of Chartered Certified Accountants
Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.
