Three prominent plant-hire trade bodies urge a critical tax break extension to cover machinery rented without operators.
- The current tax break applies only to machinery rented with operators, categorised as a service, leaving other rentals uncovered.
- A joint letter to the Treasury suggests broadening tax relief could drive plant sales, boosting infrastructure and homebuilding ambitions.
- Statistics reveal compelling potential revenue growth, with estimated increased plant sales raising significant funds for the Treasury.
- Industry forecasts indicate a decline in the construction plant market, making the proposed tax relief crucial to revitalise the sector.
In an appeal that underscores pressing needs within the construction industry, three major plant-hire trade organisations have called on the chancellor, Rachel Reeves, to extend a crucial tax relief to include equipment rented without an operator. Currently, only plant hired with an operator, classified as a service, benefits from the full expensing relief. This leaves a significant portion of the market—those renting equipment alone—uncovered by the existing tax incentives.
The joint appeal, articulated in a letter sent to the Treasury on 29 August, is signed by the Construction Equipment Association, Hire Association Europe, and the Construction Plant-hire Association. These bodies argue that expanding eligibility for the tax relief would not only incentivise further plant and machinery investment but would also support governmental objectives, particularly those aimed at expanding infrastructure and housing projects.
The relief, introduced in the 2023 Budget, currently allows companies to claim 100 per cent capital allowances immediately for qualifying investments, rather than distributing the deductions over several years. According to data from a poll conducted by the Construction Plant-hire Association last autumn, 86 per cent of its members reported they would likely boost investment in plant were the full expensing allowance applicable to a broader range of rentals.
Financial projections by the trade bodies suggest that extending the tax relief could yield an average of £8,300 per plant sale—implying a potential surge of 3,154 additional plant sales. This increase could contribute an estimated £26 million to the Treasury, enhancing fiscal capabilities while supporting industry growth.
Further analysis highlights that the construction plant market is on a downward trajectory, forecasted to contract by approximately 13 per cent in 2024. The trade organisations note that such a tax adjustment could revitalise this sector, currently disincentivised from investing in low-emission technologies crucial for meeting carbon reduction targets.
The letter also addresses the need for legislative measures ensuring that qualifying plant remains within the UK to prevent duplicate claims—a step they acknowledge the HMRC is already considering.
The proposed extension of tax relief is vital to fostering investment and sustaining growth in the UK construction industry.
