The Financial & Leasing Association has called on the government to recognise the importance of the asset finance market and extend the super-deduction allowance to include leasing.
Introduced in April 2021, companies have been able to claim a 130% capital allowance deduction on qualifying new plant and machinery assets and a 50% first-year allowance for qualifying special rate assets.
For companies, this means up to 25p per £1 invested can be cut from their tax bills.
The call from FLA follows an 80% growth in total asset finance new business in April 2021 when compared to the same month in 2020, while the first quarter of the year recorded a 15% rise in new business.
The commercial vehicle sector was up 140% month-on-month in April, while the plant and machinery sector was up 58%.
Business equipment was also up for the month when compared with April 2020, reporting a 43% rise in new business. However, the IT equipment finance sector saw new business fall 13% in April when compared with the same month in 2020.
Geraldine Kilkelly, director of research and chief economist at the FLA said that this growth was largely expected, and that the recovery was “broad-based”.
“The fall in IT equipment finance new business reflected the relative strength of this sector at the start of the pandemic,” she added. “If the industry maintains the performance we have seen in recent months, it would be on course to reach its pre-pandemic annual new business total by the end of 2021.”