Following yesterday’s Budget, the Treasury has now confirmed that the new 40% First Year Allowance (FYA) will apply to assets purchased for hire and leasing from January 2026. This follows sustained lobbying from across the industry to correct a long-standing inconsistency in the capital allowances system.
This is a positive step for hire companies, who play a central role in keeping construction and related activity moving. Allowing the sector to access the FYA means businesses will be able to write down 40% of the cost of new plant, tools, and equipment in the first year, improving cash flow and supporting further investment.
Viki Bell, CEO of the CEA, said:
“Mark Bradshaw from Hire Association Europe met with Treasury and HMRC officials yesterday following the Budget and confirmed the good news. This is a key win for the sector, and we will capture the detail in our report as it should help stimulate sales for our members as well. The CEA has lobbied for this alongside the HAE and the CPA for many years, so it’s encouraging to finally see progress.”
Mark Bradshaw Director of Public Affairs, HAE (Hire Association Europe) added:
“It has been a truly collaborative effort over at least four years, unlocking the potential of hire businesses working with OEMs to invest. Thank you to the CEA for everything you did to help get this over the line, and equal thanks to the CPA and IPAF for their work throughout.”
Further guidance is still needed on how the allowance will operate in practice, but today’s update is an important milestone. It recognises the value of the hire sector to the wider economy and brings welcome clarity for businesses planning future investment.