Finance & Leasing Association (FLA) has supported the interim 40% first-year allowance (FYA) for leased assets, which was announced at the UK Budget 2025.
The measure aims to boost investment by reducing restrictions found in other FYAs, particularly for assets bought for leasing purposes and by unincorporated businesses.
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Under the proposed interim FYA, main rate expenditure will qualify for a 40% deduction in the initial year.
This is designed to enable leasing providers and unincorporated businesses, who have been previously unable to access certain FYAs, to receive additional support at the point of investment.
Commenting on the budget, FLA CEO Shanika Amarasekara said: “While today’s Budget does not go as far as we and our members would have liked, it is clear that the principle of including leasing within full expensing has now been accepted by the government.”
Legislation is set to be introduced in the Finance Bill 2025-2026.
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By GlobalDataIn addition to the interim measure, the Finance Bill will introduce a new permanent FYA set at 40%.
This permanent allowance will apply to certain assets which currently do not qualify for full expensing or the Annual Investment Allowance (AIA).
Amarasekara added: “In a challenging fiscal environment, this is a sensible holding position that supports business investment while wider reforms are developed. Leasing plays a critical role in enabling firms to invest in the equipment and technology they need—flexibly, cost-effectively, and in a way that aligns with how businesses choose to manage their cash flow and risk.
“We look forward to continuing our work with HM Treasury and HMRC to deliver the full expensing framework that will maximise growth and ensure firms can access the funding tools that best support their ambitions.”
