Hire association welcomes 50% first-year allowance in Budget but flags employment costs

Hire Association Europe (HAE EHA) has welcomed the increase in the first-year capital allowance from 40% to 50% announced in the Budget on 28 October 2026, saying it had lobbied the Treasury for the change.

The Budget, delivered in Parliament by Chancellor of the Exchequer John Healey, was the first since Andy Burnham became Prime Minister, the association said in its initial response.

Mark Bradshaw, HAE EHA Director of Public Affairs, described it as a very mixed Budget that showed the extent of the UK's economic difficulties.

He said: "HAE EHA welcomes the increase in the First Year Allowance from 40% to 50%, as we worked hard to persuade the Treasury to bring this in (and not to scrap the new allowance)."

The allowance

The Treasury said in the Budget document that reformed capital allowances would strengthen the upfront incentive to invest while also raising revenue.

First-year allowance	Rate
Existing allowance (expenditure from 1 January 2026)	40%
Announced at Budget 2026	50%

The existing 40% allowance applies to expenditure incurred from 1 January 2026, according to an HM Revenue & Customs policy paper. HMRC said the allowance would let the leasing sector, which had been excluded from accelerated relief, benefit from it.

Under the 40% allowance, GOV.UK guidance says a business deducts 40% of the cost from its profits before tax, then claims writing-down allowances on the remaining 60% in the next accounting period.

Four-year campaign

HAE EHA said its campaign on capital allowances for hire assets lasted more than four years. After the November 2025 Budget, the association said it met Treasury and HMRC officials to obtain details of the new allowance, as the announcement itself had not included them.

The Construction Equipment Association (CEA) said it had lobbied for the allowance alongside HAE and the Construction Plant-hire Association (CPA) for many years. Viki Bell, CEO of the CEA, called the 40% allowance a key win for the sector in November 2025, and Bradshaw described it then as a collaborative effort over at least four years.

Employment costs

Bradshaw said other measures in the Budget were positive for hire businesses but pointed to an omission.

He said: "Further funding to boost apprenticeships and accelerate mayoral-led infrastructure and place-shaping is all positive news for our sector. Unfortunately, no sign yet of measures to reduce the rising costs of employing people."

HAE EHA had noted after the October 2024 Budget that employment-related costs would rise for all businesses through increases to the National Minimum Wage and employer National Insurance contributions.

The Budget document lists an additional £1.5bn to deliver about 10,000 homes in England. HAE EHA summarised the Budget as covering help with bills and the cost of living, increases to pensions and the minimum wage, changes to business taxes and more spending on housing and defence.

HAE EHA, a Birmingham-based trade association for the plant, tool, equipment and event hire sectors, has more than 700 member companies in the UK, Europe and elsewhere.

The association said it will update members once it has worked through the documents published alongside the Budget.