UK Car Lending

FLA calls on government to help companies “finance decarbonization”


The Finance Leasing Association (FLA) declared a wholesale green finance guarantee to Finance Minister Rishi Sunak, approaching ratings of companies needing improvement to make green businesses more affordable. The prime minister formulated a financial plan for the harvest period on October 27, and the FLA granted accommodation to the public authority. This includes some estimates that will help organizations reduce their energy use and move towards net zero emissions. The government needs to put in place systems that eliminate the high level of credit risk routinely associated with green assets due to the vulnerability identified with their depreciation or obsolescence.

The involvement of lenders is clear to the government, as loans are often “the only way to keep more environmentally friendly vehicles, factories and machinery, home renovations or office equipment within reach of customers. “in FLA. He said this should be at the heart of Plan Zero.

At the heart of the proposal to help companies ‘decarbonize their finances’ are the recommendations of the Green Finance Wholesale Guarantee to ensure affordable financing of green assets in consumer and business financial markets.

He said: “Risk is an issue that eases over time once there is enough data to calculate residuals and an established secondary market in which to sell used assets, but time is a luxury that we do not have if the government Net Zero goals must be met.

“We therefore recommend a wholesale green finance guarantee program that would run from 2022 to 2026 and cover losses on a portfolio basis.”

“Because the Government’s schedule does not allow this market to evolve at its own pace, risk sharing is necessary.

The FLA’s submission to the budget also includes a recommendation to reform corporate tax rules to allow “full expensing” so that businesses can immediately deduct the cost of investments, rather than spreading it over. the life of the asset.

When full expensing was introduced in other countries, it resulted in significant investment growth, he said.

The FLA’s suggestions come as a News Insight article published in the November edition of AM magazine concluded that many auto retailers may be forced to invest in a Net Zero future due to soaring gas costs. and electricity this winter. But Nigel Morris, tax director at MHA, told the latest edition of AM his disappointment that green technologies, including electric vehicle (EV) charging points, solar panels and wind turbines are not included in the government’s current 130% super tax deduction.

Morris said such investments should now be dealer radars. “In the past, auto retailers would always look at these things and compare them to the price of a new rail in the shop – or something similar,” he said.

“As the rising cost of energy persists, it transforms the return on investment of these items. Solar panels that could have offered an eight to ten year return on investment could now go down to, say, four to six. Earlier this week, ministers revealed that the UK government will allocate £ 620million towards grants for zero-emission vehicles and electric vehicle infrastructure, including funding for local electric vehicle infrastructure, as part of of its new Net Zero strategy.

It is also allocating an additional £ 350m from its £ 1bn Automotive Transformation Fund (ATF) to support the electrification of UK vehicles and their supply chains. The industry’s premier information and networking event returns to the NEC, Birmingham on November 11.

Reserve your spot in advance to make sure they’re ready to embrace a busy schedule of seminars and interactive booths.

Summary of the news:

  • FLA calls on government to help companies “finance decarbonization”
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