Thanks to the persistent advocacy efforts of the Finance & Leasing Association (FLA), full-expensing has achieved permanence in the UK’s tax code.

The Finance Act 2024, which received Royal Assent on 22 February 2024, cements ‘full expensing’ as a crucial element in the nation’s economic toolkit, alongside a slew of tax relief measures unveiled in the 2023 Budget.

The policy, allowing companies to deduct 100% of qualifying plant and machinery investment immediately from April 2023 to April 2026, has proven its worth

While initially proposed as a temporary measure due to estimated up-front costs of £10 billion annually for three years, the true long-term cost, as suggested by the Institute for Fiscal Studies (IFS), is around £1–3 billion per year.

The IFS contends that making full expensing permanent not only simplifies the tax system but also eradicates the corporation tax penalty for equity-financed investment. Despite these potential benefits, the government, tethered by short-term revenue concerns, hesitated to fully embrace permanence.

Yet, amid this tax announcement, one sector has been left in the shadows — the leasing industry. The historical exclusion of leased assets from first-year allowances under full expensing has long been a hindrance. However, a flicker of hope emerged with the government’s announcement of a technical consultation on full expensing last year.

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Simon Goldie, the Finance & Leasing Association’s (FLA) Director of Advocacy, wrote recently: “A technical consultation is a precise phrase that is used when governments are looking at the detail, instead of the merits, of a policy proposal. For the inclusion of leasing in full expensing, they will want to test the robustness of the tax rules, to spot unintended consequences and avoid inefficiency in the system. They will be checking with us and tax technical experts.”

As the spectre of a looming general election casts its shadow, the UK leasing industry envisions a future where HM Treasury overcomes its longstanding resistance to first-year allowances for leased assets.

In the face of the economic downturn gripping the UK, it is crucial to reflect on the contributions of FLA members who, in the preceding year alone, facilitated £151 billion in new finance to UK businesses, households, and the public sector.

Having successfully navigated the advocacy landscape to secure permanence for full expensing, one might ponder whether the FLA’s advocacy team can extend this triumph, presenting a convincing case for liberating an industry confined by antiquated tax policies.

Could we envision an extension of full expensing to include lessors of plant and machinery? The groundwork laid suggests that such aspirations might not be beyond reach