CPA reacts to Budget

15 March 2023

In his first Budget statement, chancellor Jeremy Hunt announced a new policy of “full expensing” as a replacement for the Super Deduction Allowance which expires at the end of this month. However, as with the SDA, it is not clear whether plant and equipment hirers will be eligible. 

Under full expensing, every pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits. It will be introduced for the next three years and the government intends to make it permanent “as soon as we can responsibly do so”. 

The SDA enabled eligible companies investing in qualifying new plant and machinery assets to benefit from a 130 per cent first-year capital allowance, effectively cutting their tax bill by up to 25p for every £1 they invest. However, most hire businesses could not utilise it because it was only available to firms which both own and operate the equipment. 

Commenting on this and other measures announced in the Budget,  Kevin Minton the Chief Executive of the CPA said: “Steps to boost business investment and maintain the freeze on fuel duty are welcome. However, we are seeking clarification from the Treasury on the details around the successor to the SDA, and whether the plant hire sector can qualify for this new scheme. 

“Following the announcements on the delay to HS2 last week, a Budget for growth needs firm commitments from government on future infrastructure spending and projects. Proposals in the Budget to create Great British Nuclear, while welcome, do not provide immediate comfort to the construction sector, given these plans are medium to long-term goals. However, we hope plans to provide the Carbon Capture Usage and Storage scheme with its £20bn fund, could provide some level of confidence for infrastructure planning. 

“The construction sector may welcome the Chancellor’s plans to attract over 50s to the workplace to help address the skills shortfall the industry is facing. However, this new scheme must complement existing initiatives already in place.”

Also, the headline rate of tax on company profits will rise from 19 per cent to 25 per cent on 1 April, as announced in last year’s autumn statement.

● Don’t forget to explore the Site-Eco area of the blog for news of sustainable products and developments relevant to the world of hire.