The Construction Equipment Association (CEA), Construction Plant Hire Association (CPA), and Hire Association Europe (HAE) have jointly sent a letter to chancellor of the exchequer Rachel Reeves MP pushing for plant hire firms to be allowed to benefit from tax breaks on their machinery investments.
It was back in the budget of April 2021, when he was chancellor, that Rishi Sunak introduced what was then call the super-deduction for companies investing in new plant and machinery, enabling them to reduce their taxable profits by 130% of the cost. It was initially for two years only, as a post-covid economic stimulus. However, only end-users were able to benefit from it, not companies hiring out unoperated plant.
This full expensing allowance was then made permanent in Jeremy Hunt鈥檚 November 2023 financial statement. Despite industry lobbying, hire companies remained outside the scope of the scheme, although Hunt promised to keep this under consideration.
The letter from the CEA, CPA and HAE tells Reeves that extending the full expensing allowance for short-term rented plant in the construction sector would not only correct an anomaly and simplify the tax system but also boost to industry capacity to deliver the National Infrastructure Pipeline and help meet the government鈥檚 ambitious house-building aspirations.
It is also likely to unlock investment in new cleaner, greener machines with reduced emissions and a lower carbon footprint.
And, as 43% of construction machines sold in the UK are manufactured here, the tax revenue generated from increased sales could be worth a 拢26m net benefit to the Treasury, the trade associations argue.
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