Simon Goldie, Director of Advocacy
The Chancellor’s eye-catching announcement that full expensing was to become permanent dominated the business news. HM Treasury (HMT) also announced a technical consultation on the drafting of legislation to include leasing in this capital allowance regime.
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. If there are no ‘showstoppers’, we could see draft legislation announced at a fiscal event. However, there is an electoral cycle that could get in the way. More of that later.
The key take-away is that this is technical and not policy. As soon as the Super-deduction (SD) was announced by a former Chancellor, now working next door to his previous residency, we built and led a coalition of representative bodies that spanned the supply-chain: finance providers, manufacturers, logistics, construction, and small business. We set out why leasing should be included. After writing to the Chancellor and discussing this with HMT officials, we realised that we might win the argument but run out of time given the limited life of the deduction. We began to research options for life after the SD, working up several proposals. One was full expensing.
When that was announced, HMT committed to exploring how it might include leasing. As well as working alongside them, we continued our advocacy to Government and the Opposition.
The result has been permanent full expensing and the technical consultation. That will begin in January. With rumours of an early Spring Budget and an election in May, HMT may not have enough time to complete the work. We will do all we can to assist them, and given it is a technical consultation we are assuming that it will be laser-focused on areas of key importance.
Published 04 Dec 2023