Spring Budget 2023 - Full CPA Reaction and Comments
Wednesday saw Chancellor Jeremy Hunt give his first Spring Budget, with economic growth and getting people back into work, the key areas of focus for the first major fiscal event of 2023. Following the disappointing news that both HS2 and the Lower Thames Crossing projects would be delayed by up to two years, the focus for construction, was on how the government would use the Budget as an opportunity to support the construction sector as a driver of growth, jobs and skills.
While a lot of the focus and debate was the government’s efforts to provide childcare and supporting people back into work, there were several measures that will impact the plant-hire sector.
Full Expensing Model to Boost Investment
As a replacement for the Super Deduction Allowance (SDA) which is due to finish on the 31st March, from 1st April, the government is introducing full expensing, a 100% First Year Allowance. This allowance will run initially, for three years, with a view to extending it beyond 31st March 2026. The allowance means companies will be able to write off the full cost of qualifying main rate on brand new plant and machinery investment in the year of investment. This will apply to IT equipment, plant or machinery, and will be deducted in full and immediately from taxable profits.
Please note - We are currently in discussions with the Treasury and HMRC, to ensure the plant-hire sector can take advantage in some form, of the new allowance. Currently, under existing rules, like the SDA, plant-hire companies will not be able to take advantage of Full Expensing, but we are hoping to provide further information and clarity in the coming months to ensure this position changes.
Freeze in Fuel Duty and 5ppl Cut Extended
The Chancellor announced the existing 5ppl cut in Fuel Duty, first announced in March 2022, would be extended, with the current freeze on Fuel Duty maintained. This is welcome news and follows calls in our Budget submission for the existing cut and freeze, to be maintained. In the face of continued high fuel prices, this move provides some relief to the plant-hire companies.
It was disappointing to see very little movement or action on the rebate for HVO to be reintroduced, with the Budget lacking any information and detail on incentives to decarbonise the NRMM fleet. While HVO and other biodiesels are seen as interim fuels, they still have a role to play in reducing levels of air pollution and lower emissions. This was a missed opportunity by the Treasury.
Creation of 12 Investment Zones
The Government announced the creation of 12 investment zones across the UK. These zones will benefit from enhanced Capital Allowance rates, and relief from Stamp Duty Land tax, Business Rates, Structure and Buildings Allowance, and National Insurance contributions from employers. These zones have the potential to boost business investment and economic growth, however, they must match and complement existing schemes in place that operate at a devolved level. Duplication of effort will add to bureaucracy and cause confusion for companies looking to take advantage of these areas.
The creation of Great British Nuclear to drive a civil nuclear programme as part of wider efforts to decarbonise the economy, provides some degree of certainty for the construction industry, however this is very much at the planning stage and will remain a medium to long-term goal for the moment. The £20bn Carbon Capture Usage and Storage scheme will provide a level of confidence for infrastructure planning, but again, we remain cautious given recent developments with HS2.
Attracting Over 50 Workers to the Workforce
The well trailed focus on returning older workers to the workforce is a welcome step and recognises the contribution this part of the employment base still has to offer and make. At a time when the plant-hire sector has an ageing workforce, being able to upskill and retain existing workers remains an important area of focus and something the industry continues to grapple with. The new ‘Returnerships’ programme should complement existing schemes on offer, helping both employee and employer to navigate what can be, a complicated picture.
For further information, please contact Chris Cassley (email@example.com)