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Fri February 23 2024

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No full expensing for hire companies yet

22 Nov 23 The chancellor has resisted calls from the construction industry to extend full expensing of capital investment – the super deduction – to hire and leasing companies but promises he is thinking about it.

Chancellor of the exchequer Jeremy Hunt on his way to deliver his 2023 autumn statement at the House of Commons
Chancellor of the exchequer Jeremy Hunt on his way to deliver his 2023 autumn statement at the House of Commons

As signalled at the spring budget, chancellor of the exchequer Jeremy Hunt announced permanent full expensing in his autumn statement for those investing in IT equipment, plant and machinery. It means that for every million pounds a company invests, they get £250,000 off their tax bill in the very same year.

It was introduced on a temporary basis in 2021 when prime minister Rishi Sunak was chancellor. Hunt described it being made permanent as “the largest business tax cut in modern British history”.

The Construction Plant-hire Association (CPA) had sought to persuade him in a letter last month to extend the allowance to hire and leasing companies, which are currently outside of its scope. This has not happened but the Treasury has made clear that it is considering it.

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In supporting documents published to accompany the autumn statement, it said: “Since spring budget, the government has been exploring the case for expanding the scope of full expensing to include assets for leasing with an industry working group. The government will continue to carefully consider whether there is a case to do so and publish a technical consultation in due course to seek further input from a wider range of stakeholders.”

This did not entirely satisfy CPA chief executive Stu McInroy, who said: “Today’s decision to exclude elements of the construction plant-hire industry from the decision to make full expensing allowance permanent is extremely disappointing and leaves CPA members unable to take full advantage of the allowance. CPA members are pivotal to UK business investment and productivity. If the government is serious in its desire for the economy to grow, plant-hire companies must be afforded the opportunity to take advantage of the changes to the full expensing allowance without restriction.

“We urge the government to bring forward its technical consultation on full expensing and engage with our industry as soon as possible. The CPA has to date been a leading member of the Treasury’s working group in this area and we are keen to ensure our members are able to benefit fully from the government’s growth agenda.”

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