The Chancellor is being urged to rethink its approach to the ‘Super Deduction’ tax incentive to drive business investment in new commercial vehicles and equipment.
While the temporary 130% super deduction was announced in the 2021 Budget for new plant and machinery and later confirmed to apply to purchases of new commercial vehicles, it’s not applicable for leasing and short-term hire – two of the most common ways that businesses acquire new plant and machinery.
And the BVRLA and six other leading trade associations have now warned that this will exclude thousands of companies that rely on leasing and rental to finance their commercial vehicle acquisitions; one in five trucks and one in six vans on UK roads are rented or leased.
Gerry Keaney, chief executive officer of the BVRLA, 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.”
The BVRLA’s calls for the SDA criteria to include short-term hire and leasing have been backed by a range of industry bodies from across the tax, logistics, construction, manufacturing and small businesses sectors, including the Finance and Leasing Association and Logistics UK, which says the move would help businesses access cleaner vehicles.
Denise Beedell, public policy manager at Logistics UK, commented: “The logistics industry has risen to the challenge of keeping the supply chain going in the face of unprecedented obstacles and rising costs; including leasing and short-term hire would provide much needed support to this vital sector now also working to meet the even more testing challenge of the transition to net zero.”
