Prolectric calls for SDA clarification
23 March 2023
Prolectric, the off grid renewable lighting and power generation equipment specialist, has added its voice to organisations calling for the government to clarify how plant and equipment hirers can benefit after the imminent withdrawal of the Super Deduction Allowance (SDA).
In his Budget statement last week, chancellor Jeremy Hunt announced a new policy of ‘full expensing’ as a replacement for the SDA. However, as with the SDA, it is not clear whether plant and equipment hirers will be eligible.
Under full expensing, every pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits. It will be introduced for the next three years and the government intends to make it permanent “as soon as we can responsibly do so”.
The SDA enabled eligible companies investing in qualifying new plant and machinery assets to benefit from a 130 per cent first-year capital allowance, effectively cutting their tax bill by up to 25p for every £1 they invest.
As mentioned earlier on the blog, industry associations including the CPA and HAE have recently urged the government to do more to help hire companies cope with rising costs
Rachel Preen (above), Prolectric’s MD, said: “We naturally welcome the latest boost and applaud the push for green innovative technology like ours, which is also helping to mitigate against the additional costs from last year’s red diesel tax increase. However, the uncertainty on whether plant and equipment hirers will be eligible for the SDA is not ideal, particularly with the imminent expiry date on 31 March.
“We fully support the CPA’s quest to push for the 50 per cent special rate first-year allowance to enable all hire companies the ability to access the latest innovations through investment into new and developing technologies, which are critical for the sector to scale and meet customer demand.
“The move to permanently increase the Annual Investment Allowance (AIA) in the 2022 Autumn Budget to £1 million was a welcome first step. We now need swift clarification on the SDA in order to encourage and incentivise robust investments to provide a critical boost to the economy and a faster route out of recession,” she added.
“We’re committed to providing the very latest solar technology in the most practical way to help businesses and move away from using polluting fossil fuels. Making a simple switch from red to white diesel in generators on construction sites incurs an additional expense of 46.81 pence per litre used — five times as much duty as before. Naturally, this is having a detrimental impact on costs and cash flow for many businesses.
“To boost the economy and collectively meet the construction industry’s aggressive 2050 net-zero ambitions, the SDA offers a prime opportunity for the plant hire industry to level up and embrace the sustainable power revolution. In short, we need to exploit every opportunity to meet our vital industry decarbonisation targets whilst driving down diesel usage, CO2e emissions and operational costs,” she said.
● Don’t forget to explore the Site-Eco area of the blog for news of sustainable products and developments relevant to the world of hire.