Following the delivery of the Spring Budget yesterday, the Government has now indicated that its new full expensing tax break could be opened up to the rental and leasing sectors, bringing a “fleet-friendly” capital allowance.
In his speech, Chancellor Jeremy Hunt announced a new 100% first-year allowance that will enable companies to write off the full cost of their investments against their corporation tax bill in the first year.
The successor to the current Super-Deduction tax relief, the policy of “full expensing” for equipment and machinery, including fleet vans/trucks, runs until 31 March 2026 and is intended to be made permanent “as soon as we can responsibly do so”.
It means every pound invested in technology, plant, or machinery is fully deductible from taxable profits.
While there were initially no details to show that the new scheme now includes rental and leasing – despite calls from leading trade associations – the BVRLA says it’s now had a pledge from the Government that it will work with the vehicle rental and leasing sector “to try to deliver a more supportive capital allowances regime that will benefit all fleets”.
The association added: “The leasing and rental sectors have historically been excluded from claiming these powerful investment allowances and passing them onto their customers in the form of lower lease or rental rates.
“In announcing the new allowances, the Government has publicly indicated that it will work with the BVRLA to develop a policy solution that includes this key vehicle acquisition method for the first time.
The BVRLA, in conjunction with other stakeholders, has been invited to engage with HM Treasury to “explore how to overcome long-standing exclusions ahead” of the next fiscal event, which takes place this autumn.
Chief executive Gerry Keaney commented: “The Government has acknowledged how critical vehicle rental and leasing is in driving business investment in cleaner commercial vehicles and infrastructure.
“We look forward to working with them in the coming months to develop a powerful capital allowances regime that can drive even faster decarbonisation of road transport.”
