Seven leading trade organisations are calling on the Chancellor to extend eligibility of the super-deduction allowance (SDA) to include leasing and short-term hire - two of the most common ways businesses acquire new plant and machinery.

The SDA was introduced on April 1 to stimulate a post-pandemic recovery in the UK economy and means that, until March 31, 2023, companies can claim 130% capital allowances on qualifying plant and machinery investments.

In effect, this cuts a company’s tax bill by 25p for every £1 it invests in new equipment.

However, one in five trucks and one in six vans are acquired through leasing or short-term hire and the legislation fails to include these.

The seven groups – Logistics UK, British Vehicle Rental and Leasing Association, Civil Engineering Contractors Association, Forum of Private Business, Finance & Leasing Association, Manufacturing Technologies Association and Association of Chartered Certified Accountants – have written to Rishi Sunak to urge him to extend the eligibility criteria to cover them.

Denise Beedell, public policy manager at Logistics UK, said: “Logistics UK is pleased to join with other trade associations in calling on the Chancellor to extend the eligibility criteria for the SDA to include leasing and short-term hire.

“The logistics industry has risen to the challenge of keeping the supply chain going in the face of unprecedented obstacles and rising costs; including leasing and short-term hire would provide much needed support to this vital sector now also working to meet the even more testing challenge of the transition to net zero.”

Gerry Keaney, chief executive officer of the BVRLA, added: “With the UK economy still emerging from the impact of the COVID pandemic, the Government is urging fleets to spend billions of pounds on new ultra-low emission vehicles.

“A huge proportion of this investment will be made through vehicle leasing and rental, which provides businesses with the fixed cost and flexibility they need to continue decarbonising.

“The eligibility restrictions on the super deduction mean that this tax incentive is only benefiting the larger, cash-rich businesses that can afford to buy vehicles outright.

“The Government must move with the times and use investment incentives that support the acquisition methods modern businesses rely on.”

The seven business groups have invited officials to a roundtable discussion this month to discuss the issue.