In yesterday’s spring budget statement, Chancellor Jeremy Hunt announced plans to draft legislation in the coming weeks, aiming to extend full expensing to assets used for leasing in the future.
Speaking in Parliament during the delivery of the Budget, Hunt said: “Having listened to calls from the CBI, Make UK and the BCC, we will shortly publish draft legislation for full expensing to apply to leased assets, a change I intend to bring in as soon as it is affordable.”
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Initially introduced as a temporary measure in the 2023 Budget and later made permanent in the 2023 Autumn Statement, full expensing provides a 100% first-year allowance for qualifying equipment and machinery investments, allowing companies to offset the entire cost against their corporation tax.
The rental and leasing sectors were previously excluded from these benefits, prompting the FLA and the BVRLA to emphasise the significant missed opportunity.
The government’s commitment to extending full expensing to leased assets is seen as a positive move, addressing an historical injustice, although details on the affordability timeline remain pending.
Industry responds
John Phillipou, Managing Director of Paragon Bank’s SME Lending Division and Chair of the Finance & Leasing Association (FLA), said: “The extension of full expensing for leased plant equipment and machinery is a sensible decision that will stimulate new investment from rental companies who rely on leasing as the right product for their replacement cycles.”
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By GlobalDataStephen Haddrill, Director General of the FLA, said: “We welcome this transformative move. Its affordability will be covered through increased investment and higher productivity, and its introduction should be as fast as possible.”
Gerry Keaney, BVRLA Chief Executive, called the commitment “a monumental step forward to rectify an historic injustice” and looks forward to engaging in delivering this long overdue alignment in tax policy.
Neil Rudge, Head of Enterprise at Shawbrook, said: “SMEs could benefit significantly from [the] announcements,” highlighting the potential for businesses to claim the entire cost of leased equipment against their tax bill.
Ed Rimmer, CEO of Time Finance, viewed the announcement as “a big catalyst for business investment,” providing an opportunity for more SMEs to invest in growth while benefiting from the Annual Investment Allowance.
Mike Randall, CEO of Simply Asset Finance, viewed the Chancellor’s Spring Statement as offering more certainty for SMEs to plan their future growth, saying: “The extension of the full expensing tax scheme to leased assets will also be a very welcome development for small businesses.”
Caroline Sandall-Mansergh, Consultancy and Channels Development Manager at Alphabet GB, expressed support for the extension of full expensing to leased assets, saying: “We hope the government will provide further clarity on timelines, and that it will continue to work with leaders within the leasing sector to ensure the reformed full expensing policy meets the investment needs of the modern business.”
Matthew Walters, Head of Consultancy Services and Customer Value at ALD Automotive | LeasePlan UK, described the move as “an important measure to promote investment, and we are eagerly awaiting further details in the forthcoming draft legislation.”
Brian Jones, the President of the Construction Plant-hire Association (CPA), emphasised the importance of clarity on the fiscal conditions that must be met before the government is prepared to agree to this proposal. He said: “We urgently need a timetable of action for this legislation that sets out when CPA members can invest with confidence in new equipment and boost business investment and productivity.”
David Bushnell, Director of Consultancy and Strategy at Fleet Operations, and Philip Nothard, Chair of the Vehicle Remarketing Association, expressed positive sentiments about extending full expensing.
‘FLA pressed the Treasury for Full Expensing capital investing’
Full expensing entrenched in UK law, yet leasing’s inclusion awaits its day
