New vans and trucks qualify for super-deduction, says HMRC

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A new super-deduction tax relief, announced in the Budget, can be applied to fleets investing in new vans and trucks, HMRC has confirmed.

The Government says that companies investing in qualifying new plant and machinery, from April 1, 2021, to March 31, 2023, will be able to claim a 130% super-deduction capital allowance, or a 50% first-year allowance (FYA) for qualifying special rate assets.

Expenditure qualifying for the super-deduction would have ordinarily been relieved at the main rate writing down allowance of 18%, while the special rate writing down allowance was 6%.

An HMRC spokesman told Fleet News: “Heavy and light commercial vehicles can qualify for the super-deduction provided they meet the conditions (e.g. new and unused).”

Company cars are not treated as ‘main pool’ plant and machinery for capital allowance purposes, however, so they do not qualify for these reliefs.

The super-deduction, says the Treasury, will allow companies to cut their tax bill by up to 25p for every £1 they invest.

Peter Golding, managing director of FleetCheck, said: “As long as you are a limited company buying new equipment using a method of finance that means you obtain outright ownership at the end, the superdeduction applies and there is no ceiling on how much can be claimed.

“For fleets, this represents a major renewal opportunity for vans and other commercial vehicles just at the moment that we are seeing new demands are being made on operations.

“For example, that could include Euro 6 vehicles in some areas of the country just as new clean air zones start to come into effect.”

Golding believes that it also means that, as electric and hybrid vans are finally starting to reach the market in quantity, that this is an ideal moment to acquire EVs and start to learn about them operationally.

“These vehicles often remain much more expensive that petrol and diesel counterparts but, thanks to the superdeduction, the cost of acquisition is suddenly much more realistic and within reach for many more buyers,” he said.

“We are seeing vans that have been used in frontline pandemic fleets or home shopping that have covered a lot of miles in the last year and probably should be considered for replacement. Again, this is the ideal moment.

“While it is widely recognised that new van orders are often slow at the moment and many vehicles are in short supply, the superdeduction applies for the next two tax years, until 31 March 2023, so long lead times are not really a problem.”

Golding suggests businesses should seek advice from their accountants to ensure that the superdeduction applied to any fleet spending they were planning.


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