CEA responds to Autumn Budget 2026: Investment welcomed, but manufacturers need long-term certainty
The Construction Equipment Association (CEA) has welcomed measures announced in the Autumn Budget 2026 aimed at supporting industrial investment, advanced manufacturing and regional infrastructure, while stressing that long-term confidence, competitive operating conditions and a consistent pipeline of infrastructure projects remain essential for the UK's construction equipment sector.
Following Chancellor John Healey's Budget announcement on 28 October, the CEA highlighted the opportunities that increased investment could create for equipment manufacturers and their supply chains, alongside the continuing pressures facing British industry.
Viki Bell, Chief Executive of the CEA, commented:
“Today's Budget includes commitments to industrial investment, advanced manufacturing and regional infrastructure that are relevant to the UK's construction equipment sector.
“The additional investment announced through the National Wealth Fund and British Business Bank could create opportunities for manufacturers and their supply chains. The government's focus on industrial AI, robotics and autonomous technologies is also relevant to an industry that continues to develop and adopt new technologies.
“However, investment announcements need to translate into projects and opportunities for British businesses. Construction equipment manufacturers need a clear and consistent pipeline of infrastructure work to give them the confidence to invest in new products, production facilities, skills and jobs.
“We also recognise the pressures facing manufacturers. Energy costs and wider economic uncertainty continue to influence business decisions, and competitive operating conditions remain essential. The government's commitment to reducing unnecessary regulation is welcome, but we need to understand how these changes will work in practice for machinery manufacturers operating in UK and international markets.
“The construction equipment industry has an important role in delivering the UK's infrastructure, housing and economic ambitions. The CEA will continue working with government to ensure the needs of manufacturers and their supply chains are recognised as these policies are developed and implemented.”
Capital allowances changes offer greater upfront relief for machinery investment
Further clarification provided by HM Treasury on 29 October has highlighted changes to capital allowances that are particularly relevant to construction equipment manufacturers and the plant hire sector.
From 1 January 2027, the main-rate first-year allowance will increase from 40% to 50%, allowing businesses to deduct half of the qualifying expenditure on new and unused plant and machinery from their taxable profits in the year the expenditure is incurred.
Importantly, the allowance will continue to cover qualifying machinery purchased for leasing, excluding overseas leasing. This is particularly relevant to plant hire businesses investing in new equipment fleets.
However, the main rate of writing-down allowance will reduce from 14% to 12%, taking effect from 1 April 2027 for Corporation Tax and 6 April 2027 for Income Tax. The special rate of writing-down allowance will remain unchanged at 6%.
The changes mean businesses will benefit from greater upfront tax relief on qualifying investments, although the reduction in writing-down allowances will slow the rate at which relief can be claimed on expenditure remaining in the main pool.
Existing capital allowances, including full expensing and the £1 million Annual Investment Allowance, will remain available where applicable.
For the construction equipment sector, the ability to claim greater upfront relief on qualifying machinery purchased for leasing is a welcome development. However, the wider package needs to be considered in the context of the reduced writing-down allowance and the longer-term investment decisions facing businesses.
Industry confidence remains essential
The CEA believes that government investment commitments must translate into tangible opportunities for British manufacturers, particularly as the industry continues to invest in safer, more productive and lower-emission equipment.
The sector has an important role in delivering the UK's infrastructure and housing ambitions, but manufacturers require confidence in future demand, manageable operating costs and a stable policy environment to support continued investment.
The CEA will continue engaging with government on the measures announced in the Budget, including their implications for equipment investment, manufacturing competitiveness and the wider construction equipment supply chain.
