Call for increased full expensing allowance

Trade associations call for increased full expensing allowance for short-term rented construction plant

THE Construction Equipment Association (CEA), Construction Plant Hire Association (CPA), and Hire Association Europe (HAE) have jointly sent a letter to The Rt. Hon. Rachel Reeves MP, Chancellor of the Exchequer, urging the Government to increase the full expensing allowance for short-term rented plant in the construction sector.

The proposal highlights the potential for a £26 million net benefit to the Exchequer, alongside a boost to the capacity of the National Infrastructure Pipeline and house-building initiatives. The industry leaders argue that extending full expensing to short-term rented plant, which is currently excluded if rented without an operator, would correct an existing anomaly and simplify the tax system.

Under current rules, plant rented with an operator qualifies for full expensing relief as it is considered a service. However, plant rented without an operator does not qualify due to restrictions on assets deemed as ‘leased’. The proposed change would streamline the tax framework, promoting further investment in new plant and machinery, particularly benefitting the construction sector, where such assets are critical.

This targeted incentive aims to encourage investment in modern equipment, thereby enhancing productivity and capacity across the industry. Importantly, the proposed adjustment would remain focused, ensuring that non-qualifying assets, such as cars, are excluded from the benefit. Legislative measures would also be necessary to ensure that the assets remain within the UK and to prevent double claims.

HMRC is reportedly already working on drafting the necessary legislation to implement these changes. A copy of the trade associations’ joint letter is attached below.