We’re committed to equipping our partners with the understanding and insight they need to strategically navigate an ever-evolving financial climate. In the 2023 Autumn Statement, Chancellor Jeremy Hunt made full expensing for qualifying plant and machinery permanent. In the recent 2024 Spring Budget, the chancellor announced an ambition to extend this measure to leased assets with draft legislation expected to be published shortly. This is a new development for which the Finance and Leasing Association have been campaigning strongly.

To understand what full expensing is, first it is important to understand what a capital allowance is: 

What are capital allowances?

Capital allowance is a type of tax relief for UK businesses. It enables businesses to deduct the taxable value of a qualifying asset from their profits, before paying tax. This is in recognition of the depreciative nature of assets.

The long-standing standard capital allowance is known as a writing down allowance. It allows businesses to claim 18% of the tax cost of an asset as an allowance against income or corporation tax every year until disposal. Any unclaimed capital allowances can be claimed upon disposal of the equipment, in many cases the majority of any capital allowance available is not claimed until the end of the investment period. Other capital allowances can provide accelerated tax relief subject to certain conditions. One of these is the Annual Investment Allowance and the other is Full Expensing, they provide similar benefits but differ in terms of what and who qualifies.

Leasing and Capital Allowances 

Capital allowances can be claimed by the entity who is the ‘tax owner’ of the asset.

For a user (lessee) to complete their qualification as tax owner, the finance agreement must also include a provision that they can obtain title to the equipment concerned. Such agreements are commonly known as Hire Purchase.

In the case of leasing agreements where there is no provision for the lessee to acquire title, it is the leasing company who qualifies as the tax owner and who can claim any writing down allowances that are available.

What is full expensing?

Full expensing is a type of capital allowance that was announced in April 2023.It was introduced to stimulate business investment and to accelerate the rate at which capital allowances can be claimed. Subject to qualification, this allowance enables businesses to deduct 100% of the cost price of the asset from taxable profits in the year of purchase (First Year Allowance).

Full expensing can be claimed by the user when qualifying equipment has been purchased outright or is subject to a hire purchase agreement.

Who is eligible for full expensing?

There are some notable exceptions in terms of what and who qualifies for the allowance.

Full expensing is an allowance against corporation tax and is therefore not available to partnerships and sole traders, unlike Annual Investment Allowance, it is also not available for second-hand or used equipment and certain assets (e.g. cars).

A further significant exception is that, unlike writing down allowances, full expensing is not- available to a leasing company when they are the tax owner and the equipment is being used by a third party. This applies to most leasing agreements other than hire-purchase. A review, however, is currently underway with a stated intention to remove this exemption.

Extending full-expensing to leased assets should allow leasing companies to offer their customers a reduction in rental payments and therefore further help stimulate much needed business investment.

What are the benefits?

• With a current corporation tax rate of between 19% and 25%, full expensing can  reduce the cost of any qualifying capital expenditure by up to an immediate 25%.
• Hire Purchase allows the user to claim first year full expensing tax relief on the purchase price of the asset whilst spreading the cost of acquisition over a number of years.
• The OBR (Office for Budget Responsibility) has estimated that there will be a 3.5% increase in business investment in the 2024-25 and 2025-26 tax years because of this initiative.
• Full expensing encourages businesses to invest in new technology and equipment. This stimulates increased efficiency and enables businesses to make essential improvements to their productivity.

What assets does full expensing currently apply to?

IT: Computer equipment and services

Materials Handling: Warehousing and construction equipment

Office Equipment: Such as printers, chairs and desks             

Specialised Technology: Non-residential fire alarm & security systems

Commercial Vehicles: Vans and lorries.

The benefits of utilising full expensing, particularly in conjunction with leasing are substantial for businesses looking to enhance operational efficiencies and spur growth. We are experts in leasing and can help businesses, through our hire purchase agreements to implement full expensing. Contact us to learn more about how we can support your investment into business enhancing assets.

We are proud to unveil our new partnership with Mind, a mental health charity renowned for its unwavering commitment to mental health education and support. This collaboration underscores LSUK’s dedication to Environmental, Social, and Governance (ESG) principles, marking a significant milestone in our journey towards fostering a more inclusive and supportive workplace environment. 

Mind’s reputation as a trailblazer in mental health advocacy aligns seamlessly with our corporate ethos, making this partnership a natural fit. Through this alliance, LSUK not only pledges to raise funds for a vital cause but also to embody Mind’s values and champion their invaluable services. Following a resounding endorsement by LSUK staff in 2023, where over a quarter of employees voted to join forces. It is evident that this partnership holds profound significance for our workforce, reflecting our shared commitment to fostering mental well-being and resilience. 

Mental health stands as a paramount concern affecting individuals across all walks of life. Mind’s exemplary work in providing specialised services to individuals grappling with mental health challenges has earned widespread acclaim.  

Eric Gandemer, Chief Executive Officer commented:

The overwhelming endorsement of our partnership with Mind by LSUK employees is a testament to the inclusive culture and unwavering dedication to CSR principles that define our company.” 

 

Jason Halliday, Chief Operating Officer, remarked:

Our alliance with Mind signifies more than just a partnership; it’s a shared commitment to nurturing mental well-being and fostering resilience. Together with Mind, we’re rewriting the narrative around mental health, one initiative at a time.” 

By joining forces with Mind, LSUK embarks on a proactive journey aimed at: 

• Supporting Staff Well-being: Access to Mind’s comprehensive resources will empower our workforce to prioritise mental wellness within the workplace, fostering a culture of care and resilience. 

• Championing Social Impact: Our support will directly contribute to sustaining Mind’s vital services, enabling them to make a tangible difference in the lives of countless individuals. 

• Volunteering for Change: LSUK is committed to actively engaging with Mind’s initiatives through volunteering, leveraging our collective talents and resources to advance their mission. 

This partnership with Mind forms an integral component of the BNP Paribas group’s broader campaign, “1 Million Hours to Help,” a testament to our commitment to social responsibility. In 2023, LSUK surpassed expectations by contributing a remarkable 1,071 hours of volunteer service, exemplifying our ability to effect positive change in our communities. 

We’re excited about what lies ahead for our partnership with Mind. Together, we can make a real difference in mental health support and advocacy. We look forward to working hand in hand to create meaningful change. 

For Media enquiries, please contact:

Rebecca Rabbitts @ marketing.leasingsolutions@uk.bnpparibas.com

Being an inclusive employer is key to who we are at BNP Paribas Leasing Solutions and within the BNP Paribas Group. We encourage all our people to be themselves at work. We also firmly believe that it is our differences that make us stronger, whether that’s a broad range of individual strengths, different backgrounds or ways of thinking. It’s that huge variety of input which enable us to challenge each other to grow and develop every aspect of our business, but most importantly to ensure we have a motivated and engaged team who can achieve their full potential and delight our customers every single day.

The latest Gender Pay Report shows we’re making good and continuous progress. A variety of actions across our recruitment, reward, talent and wellbeing strategies are supporting our ambitions. I’m proud of our whole team, all of whom embrace the topics of diversity, equity and inclusion, and am very much looking forward to continuing and building a positive culture.

– Eric Gandemer, CEO BNP Paribas Leasing Solutions UK

WHat do we know about our gap?

A gender pay gap is a measure of the difference between the average earnings of men and women (irrespective of roles or seniority). This differs to ‘Equal Pay’, which is our obligation as an employer to give men and women equal pay for equal work.

Our gender pay gap is not a result of equal pay issues, we have a gender-neutral approach to pay across all levels of the organisation, we regularly benchmark, audit and monitor this to ensure a fair approach.

BNP Paribas Leasing solutions UK Gender pay gap

We understand why we have a gender pay gap. The key drivers both across the financial services industry, and, here at BNP Leasing Solutions is due to low female representation in sales and senior leadership roles, which, relative to other positions, attract higher rates of pay. As we work to address gender balance we are seeing more women enter trainee roles to develop the pipeline for the future, which in the short to medium term can see the gap increase. This is evident in the 2022 figures.

Gender bonus gap

The term bonus includes bonus payments and recognition awards. We have seen a significant improvement in our gender bonus gap which is a combination of our continued efforts to regularly review our bonus structure at all levels of the organisation and partly due to some one-off exceptional changes.

13% of our workforce work part-time and 98% of these are women. The calculations do not take account of pro-rated bonus payments for these part-time workers. Although the part-time working pattern has a negative impact on bonus gap figures, we remain determined to support flexible working and family friendly practices.

All our people receive an annual bonus based on two key criteria – eligibility on joining and provided they are not working their notice period at the time of bonus payment. Any variation in 100% payment for either men or women is therefore related to new joiners or leavers.

Population by quartile

Pay quartiles are calculated by ranking the hourly pay of all staff, then splitting the range into four equal quartiles and calculating the proportion of men and women in each quartile. The higher proportion of men in the upper quartiles reflects the fact that there are more men than women in senior and sales positions attracting higher rates of pay.

We can see the upper quartile is moving in the right direction with year-on-year progress made since 2020, but we are aiming for a 50/50 position of male and females within this population, so we still have a way to go. This is also true of our lower quartile which remains at a low level of male representation within these roles.

WHAT WE ARE DOING TO ADDRESS THE GENDER PAY GAP

We truly believe that a diverse team is a vital part of our future success. We are really proud of the diverse and inclusive working environment we have already but we are committed to pushing ourselves to developing this further.

The demographics within our organisation continue to be the single biggest factor influencing our pay gap. Representation of women in sales and certain senior roles remains a challenge for our industry so we must continue to push ourselves with the collective and sustained efforts from our senior leadership team to address this.

As we make good progress with gender diversity within our leadership team, we are looking further into how we can attract, retain and develop talented females into traditionally male dominated roles. We aim to have an even balance of candidates and at least one female candidate on every shortlist. We are also focused on the operational roles traditionally dominated by females. Again, we aim to have an even balance of candidates for these roles and at least one male candidate on every shortlist.

We continue to build our talent pool which is 50% women. We know that change will take time, but we will remain focused and strong in our action plans to ensure our workforce is balanced, representative of the communities we work within and progress on our gender pay gap continues to be made.

BNP paribas Leasing solutions UK ACTION PLAN

Author: Andy Milsom, Head of Partner Training & Development, BNP Paribas Leasing Solutions

The economic landscape of the UK is currently marked by the recent announcement of a technical recession. With a general election also on the horizon, businesses find themselves navigating through an array of challenges. Compounding these challenges is persistent inflation, which remains above the Bank of England’s target at 4%. In such turbulent times, businesses are seeking resilient strategies to maintain stability and foster growth. Leasing can be an excellent option amidst economic uncertainties as it provides the flexibility businesses need to adapt.