Industry bodies call for scheme extension
The Finance & Leasing Association (FLA) and the British Vehicle Rental and Leasing Association (BVRLA) has asked the government to amend the Super Deduction initiative to extend it to include leasing and plant hire.
It believes this will boost investment in plant and machinery.
The Super Deduction makes allowances of 130% on new plant and machinery investments that would normally qualify for only an 18% allowance.
However, at a time when some businesses can ill-afford to make large capital expenditures, leasing or short-term hire are particularly attractive routes to acquiring newer and more productive plant and machinery.
For others, these options make good business sense because the assets will only be used for limited periods or need to be updated regularly.
The two agencies believe 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.
Stephen Haddrill, director general of the FLA said: “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.”
Gerry Keaney, chief executive of the BVRLA said: “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. 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.”
