Yesterday’s pre-Budget report by the British chancellor of the
exchequer contained several announcements of interest to the
leasing and asset finance industry – most notably, eye-catching
proposals to exempt electric cars from benefit in kind tax for five
years, and to introduce 100 percent writing down allowances for
electric vans in their first year.
However, the chancellor’s announcements received mixed reactions
from the industry. While many praised the electric vehicle tax
breaks, there was also disappointment that Darling did not go far
enough in encouraging low carbon investment.
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“The changes to capital allowances on electric vans is an
interesting move,” said David Brennan, managing director of
LeasePlan UK.
“The principle behind it is laudable, but in practice it’s
likely to make very little difference. Because of their low
emissions, electric vans wouldn’t pay any capital allowances in
their first year anyway. This seems to be more a statement of
commitment to electric vehicles than a genuinely practical step to
encourage lower emitting company vehicles.”
Furthermore, because of the relatively low demand – and
availability – of low carbon and electric vehicles, the incentives
are expected to benefit taxpayers only slightly, added Stephen
Herring, a senior tax partner at accountancy firm BDO.
Stephen Sklaroff, the director general of the Finance &
Leasing Association, also had a mixed reaction to the PBR, saying
Darling did not go far enough.
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By GlobalData“The chancellor is right to highlight the importance of low
carbon investment, such as electric vans. But unless he acts
through the tax system to support leasing of a wider range of
energy efficicient business equipment, he will not achieve his
carbon reduction initiatives,” he warned.
GE Capital’s Gary Killeen added that infrastructure would remain
an issue, regardless of the tax breaks offered by the
chancellor.
“What is needed now, to fully realise this environmentally-led
tax benefit, is a greater acceleration of the infrastructure and
technology required to support this policy change for drivers. As
importantly, the overall cost of provision and the attractiveness
of the vehicle itself will be prime factors in the decision-making
process relating to wider market adoption,” he said.
Jason T Hesse and Jo Tacon
