The Construction Plant Hire Association (CPA) has published a letter sent to the prime minister shortly before Christmas, warning that the government’s inheritance tax changes changes would have a “detrimental impact”.
CPA chief executive Steven Mulholland warned that many of the association’s members were deferring investment and hiring decisions or had put expansion plans on hold due to fears over the impact of increased thresholds on continuity plans.
The concerns are focused on proposed changes to the tax regime for Business Property Relief (BPR) that lower the level at which families will have to pay.
From 2026, 100 per cent relief will be limited to the first £1m of business assets for every person or pre-existing trust. Any assets above that threshold will be subject to inheritance tax at a discounted 50 per cent rate.
According to the government’s own figures, 81 per cent of construction SMEs are family-run.
But firms have argued they are cash poor and asset rich as they have to invest in plant equipment. The value of the equipment could pull many firms into the new tax threshold.
Mulholland wrote: “How can they continue to operate in line with these plans? To be clear, these are well-established, in some cases, large family-run businesses.
“Our members remain excluded from being able to take advantage of the Full Expensing Allowance. Meanwhile, the rise in NI [National Insurance] is a tax on jobs and will deter companies from taking on more people, and will slow increases in wages at a time when we need to increase the construction skills base.”
The CPA called on the government to consult with the industry and co-design a policy solution.
Mulholland wrote: “We call on you to reassess what these changes will mean in practice and reality, with a full consultation with businesses affected.
“We share the same vision of a growing and stable economy, built on sustainable business practices working in each region of the UK. In their current guise, your proposals will fatally undermine the very companies that are meant to be the foundation of this work.”
The CPA’s letter is just the latest attempt to lobby the Treasury since October, when the chancellor made the announcement in the Budget.
Just before Christmas, Wates director James Wates and NG Bailey non-executive director Chris Bailey were among a list of industry figures putting their names to a letter that warned of a “severe and long-lasting impact” of the tax changes.
They voiced concerns that family firms would have to choose between investment plans or saving cash for a future inheritance tax bill.
In early December, the Builders Merchant Federation warned the changes posed a threat to materials firms and could impact on the government’s homebuilding targets.
An HM Treasury spokesperson said: “We had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability to allow businesses to thrive.”
