BVRLA urges Chancellor for rethink on Super Deductions

The BVRLA and six other leading trade associations have 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) 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.  

The SDA was introduced on 1 April 2021 to stimulate a post-pandemic recovery in the UK economy. It means that any investments a business makes in main rate plant and machinery (excluding cars) will qualify for a 130% capital allowance deduction.

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.”