Call to Increase Full Expensing Allowance for Plant Equipment Hire in Construction

Construction equipment hire is an important part of the future of the country. As a plant equipment hire service that assists the construction industry, Ardent understands what it takes to be successful, and to help construction projects to meet tight budgets and deadlines in a wide range of locations, sites, and challenging conditions. The market continuously evolves, and we aim to consistently innovate and upgrade our fleet options. As with any industry however, to flourish, there needs to be some level of support from the government of the day.

The first Labour budget in over a decade

As we approach the Autumn budget from Chancellor of the Exchequer Rachel Reeves, and the first budget by a Labour government in 14 years, there is a worry from the construction industry on how it will impact businesses, and in particular, how the short-term plant hire industry for construction may suffer.

A group of UK-based associations have written an open letter to Chancellor Rachel Reeves, calling on the government to increase the full expensing allowance for plant hire in construction. The existing rules for this state that operated plant hire services qualify for full expensing relief, as it is considered a service and not just a lease agreement. Any plant that is rented to a customer without an operator does not qualify as there are restrictions on assets that are deemed to be ‘leased’.

The associations that have written the joint letter are the:

• Construction Equipment Association (CEA)
• Construction Plant Hire Association (CPA)
• Hire Association Europe (HAE)

The letter puts forward the argument that by increasing the full expensing allowance to cover both operated and non-operated plant hire, there will be a net benefit of £26 million, helping to boost the capacity of the National Infrastructure Pipeline along with housebuilding initiatives. Part of the letter read:

“The UK has £7.35 billion worth of construction plant sales per annum. The plant-hire sector is worth £53 billion to the UK economy with I.R.O 50,000 new pieces of construction plant purchased every year, therefore, 68% of plant retails in the UK are to rental companies.

“If a machine is rented with someone to operate it, it is currently eligible for full expensing relief as it provides a service, but if someone else consumes the benefits of that asset (i.e.: it is rented without an operator), it is not eligible due to the restriction on assets for `leasing`. Changing this would address a clear anomaly whilst simplifying the tax system for the industry.”

It is believed by the associations that the change would bring a targeted benefit to the industry, encouraging greater investment into the innovation of new plant and machinery, improving productivity levels and capacity, whilst boosting sustainability and renewable options of plant hire.

Ardent and the future of plant equipment hire

The plant equipment hire sector is an important one, and with the upcoming budget the first by a Labour government in 14 years, it will be interesting to see whether calls from the plant industry are heeded by the Chancellor, Rachel Reeves, to implement full expensing allowance.

At Ardent we believe in the innovation and drive of the construction industry, and we are more than just a heavy plant hire service. Our commitment extends to assisting the government in addressing the national housing crisis and providing preparation for future demand, supporting large infrastructure projects such as HS2 and Crossrail, as well as the construction of much-needed schools and hospitals across the country. We want to continue to innovate, to support the industries that we serve, and to be a force for positivity as we make a meaningful impact on the country as a whole over the coming years.