RACHEL Reeves must axe a ‘White Van Man tax’ to help grow the economy, business chiefs say.
The Chancellor is under pressure to make it easier for building firms and the farming sector to get their hands on vans, diggers and power tools.
A small firm leasing a Ford Transit could save £50 a month which amounts to saving £3,000 over the average 5-year lease.
The savings could rise for electric vans and HGVs.
Reeves must give the green light for full expensing for leased and rented assets for firms from April next year to help deliver a 0.5 per cent uplift to the economy, the CBI says.
The demand comes as the Chancellor is looking to find up to £30 billion to fill a financial black hole and increase the buffer to withstand shocks.
But the business group also states that for every £1 spent bringing in the policy, it could generate a permanent boost of £4.86.
Companies that buy plant and machinery outright can deduct 100 per cent of the cost from taxable profits in that year – saving up to 25 per cent of the asset’s value.
But firms that currently lease or rent equipment on a temporary basis can only deduct rental fees as operating expenses that are less valuable.
Figures show that a third of all vans used by businesses are leased each year.
The law has already been written but there is no start date but the CBI is pushing for it to be brought in from next April.
The majority of the growth gains to the economy will come in the first two years.
Rain Newton-Smith, CBI boss, said: “If the Chancellor wants a quick, growth-boosting win for the economy, extending full expensing to leased and rented assets is a no-brainer.
“Not only does it help hard-pressed firms now, it also delivers a near-instant booster shot to growth – which is currently crawling along at just 1% a year.
“We know businesses are desperate to make these kinds of investment, but they feel like they’re stuck in limbo – holding off until conditions improve.
Ms Newton-Smith added: “The truth is: things won’t get better unless government grasps the nettle and makes bold moves now.
“Every delay costs firms, customers, and the wider economy.”
A Treasury spokesperson said: “The Chancellor has set out the context for the Budget, recognising global and long-term economic challenges.
“It will continue to build the strong foundations to secure Britain’s future and on the priorities of the British people – cutting waiting lists, cutting national debt and cutting the cost of living.”
