News Item: Autumn Budget Report 2025 – A Heavy Burden Falling on Business but a Bright Spot for Hire
Despite the heavy list of new and increased taxes announced in the Autumn Budget on 26th November, there was a bright spot for the hire sector. Members will know that HAE EHA, along with other trade bodies, have been pressing successive governments to recognise the importance of assets purchased for hire. Most of these assets have been excluded from capital allowances, the former Super Deduction Allowance and other schemes. This is a legacy from wider anti-avoidance (not in our sector but in other parts of the economy).
Background
The previous Government accepted the case to include assets purchased for hire within the Full Expensing (FE) regime but only when fiscal conditions permitted this. This came after several meetings with Treasury and HMRC officials on the detailed options.
The Labour Government continued with this position, mentioning the potential change to FE in the Corporate Tax Roadmap.
HAE EHA has continued to press the case, providing additional information about how the economy and delivery of key national missions could be enhanced by including hire assets (and those from other sectors similarly excluded).
Inclusion in Full Expensing would have some restrictions applied. No overseas assets, equipment used by non-corporation taxpayers would not be included and there were barriers to assets used predominantly for cross hire / re-hire activity. The additional administration and compliance regime required for this would be noticeable and we know this was of concern to Ministers.
What was announced in the Budget
The chancellor made brief mention of a new 40% allowance. This didn’t include any details so, we had a meeting with Treasury and HMRC officials who provided more information.
The new First Year Allowance (FYA) will be set at 40% for main rate plant and machinery assets including those bought for hire and leasing (leasing is the term used in the legislation). It will apply from January 2026 rather than the start of the next financial year. There appear to be very few restrictions apart from excluding assets purchased for overseas use (‘insignificant’ overseas use is to be allowable but we await the definition). Assets hired to non-taxpaying entities and unincorporated businesses (small builders, tradespeople etc) are all within scope and not excluded from FYA. Second-hand assets are excluded from FYA.
Next steps
The briefing document on the FYA can be viewed here. We are expecting the draft Finance Bill to be available week commencing 1st December and for the FYA provisions to be set out in this. We have been asked to meet again with officials and to feedback on the draft clause. There will also be industry guidance which is important to encourage awareness and compliance. Again, HAE EHA will help to shape this with support from our Tax Panel.
If you would like to join this (and have financial/legal expertise), then please let us know.
Thank you
Speaking for HAE EHA, we appreciate member’s active support in this campaign which has lasted for over four years. We wanted recognition of how construction and other related sectors had changed. We also believe that assets for events are also within scope, and we want to explore this with officials.
If the experience with FYA proves to be positive and compliance is not problematic, then further enhancements may be on the table, whether utilising FYA or Full Expensing. This means our campaign will continue.
Further details please contact Mark Bradshaw, Director of Public Affairs on mark.bradshaw@hae.org.uk or 0121 380 4621, and we will share updates as the information becomes available.
Caveat
As with all taxation matters, please take professional advice. Not all the details are known yet and the legislation and guidance will be crucial in our understanding of what the FYA will do, and what is outside its scope. We know some members will want to make use of the FYA if it is applicable to their circumstances and will also want to comply with the rules.