Ahead of the spring budget taking place on 6th March 2024, the Construction Plant-hire Association (CPA) has written to chancellor Jeremy Hunt to urge the Treasury to extend the full expensing allowance across the construction plant-hire industry.
This tax benefit means that for every million pounds a company invests, it gets £250,000 off its tax bill. It was introduced on a temporary basis in 2021 when prime minister Rishi Sunak was chancellor. At that time it was labelled the ‘super deduction’.
Jeremy Hunt made it a permanent tax break last November in his autumn budget.
However, it only applies to companies investing in machinery for their own use. Companies that hire out their machinery without an operator do not qualify, which rules out many construction industry plant and tool hire companies.
Back in November, in supporting documents published to accompany the autumn statement, the Treasury said: “Since the spring budget (2023), 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.”
Despite these encouraging noises, the CPA has remained frustrated that many of its member firms still cannot benefit from the incentive to invest in new machinery.
In its pre-budget letter to the chancellor, the CPA is also petitioning for a two-year tax rebate on HVO biodiesel and a two-year extension of the 2022 cut in fuel duty.
The CPA also suggests the Treasury explore the feasibility of a trial scrappage scheme for non-road mobile machinery operators in freeport zones, with a view to widening the scheme on a national basis.
CPA president Brian Jones said: “The spring budget provides the ideal opportunity for the Chancellor to provide clear leadership and engagement with our industry. Since the last budget, the CPA has worked closely with the Treasury and the HMRC to explore ways to extend the full expensing allowance to the plant-hire industry. Whilst these meetings have been constructive, our members still remain unable to apply for the allowance and we hope this will be addressed, as well as other areas of key concern, such as an extension of a cut in fuel duty, rebates for HVO and a trial scrappage scheme for NRMM (non-road mobile machinery) operators.”
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