Three plant-hire trade organisations have urged chancellor Rachel Reeves to extend an upfront tax break to include equipment rented without an operator.
Currently, construction plant is eligible for full expensing relief if it is rented with someone to operate it because it is considered a service. Plant rented without an operator does not qualify for the same tax break.
A joint letter sent to the Treasury on 29 August by the Construction Equipment Association, Hire Association Europe and Construction Plant-hire Association (CPA) argues the move would incentivise plant sales and boost tax revenues. It adds that it would also help the government achieve its ambitious infrastructure and homebuilding plans.
“This would be a targeted benefit aimed at incentivising investment in new plant and machinery, with the construction industry a major beneficiary due to the way in which new assets are purchased and operated,” the letter says.
Full expensing relief for some machinery investments until March 2026 was announced in the 2023 Budget, allowing companies to claim 100 per cent capital allowances in one go rather than spreading the tax deduction over several years.
According to a CPA poll carried out last autumn, 86 per cent of its members would be more inclined to invest in plant if full expensing allowance was available.
Assuming an average tax revenue of £8,300 per plant sale, the trade bodies estimate the move would lead to 3,154 more plant sales, raising £26m for the Treasury.
The associations say it would also help revitalise the construction plant market, which an industry analysis forecast is due to contract by 13 per cent in 2024.
They further argue that the current tax system disincentivises plant-hire firms from investing in lower-emission technology that would help the sector reach its carbon goals.
The letter calls for legislation to ensure qualifying plant is only used in the UK and to avoid double claims, which the trade bodies claim tax authority HMRC is already drafting.
