Plant equipment owners have warned that inheritance tax changes set out in the chancellor’s Autumn Budget could put their firms at risk of closure.
The Construction Plant-hire Association (CPA) and Scottish Plant Owners Association (SPOA) said changes to inheritance tax relief, announced on 30 October, could lead to firms going out of business.
The SPOA claimed the government’s announcement “signalled the death of the plant-hire industry in Scotland”.
It warned that members could close their companies because of changes to business property relief (BPR) and agricultural property relief (APR). Both organisations said this was because the majority of their members were family-owned firms with little cash to set aside to meet extra death duty costs.
From April 2026, a £1m cap will be set by the government on assets eligible for 100 per cent BPR relief. Assets above this threshold will have a reduced 50 per cent relief.
Some plant-hire firms store their equipment on agricultural land, thereby benefiting from APR.
Tax advisory firm KPMG explained: “BPR and APR are long-established tax reliefs that can reduce the inheritance tax (IHT) that is paid on death and in certain other situations, often eliminating any charge to IHT. Those reliefs are continuing, but with effect from 6 April 2026 their impact will be to effectively halve rather than eliminate the standard IHT rates.”
CPA chief executive Steven Mulholland said 85 per cent of its members were family-run businesses.
He told Construction News: “Where is the next generation going to find the cash to take on the business?”
Mulholland explained the impact of the changes: “Plant-hire firms are asset-rich and cash-poor. They have to work the assets hard.
“If you have to set aside money for inheritance tax, that’s money you can no longer spend on products: for example, equipment that meets the green agenda.”
He described the Treasury’s current thinking as “narrow-minded”.
The SPOA said 85 per cent of its 350 members were private independent companies, and that assets and property values would take them significantly over the £1m allowance for 100 per cent BPR or APR.
It said the changes would add to the cost burden that currently includes National Insurance, employment of apprentices and tighter carbon-reduction targets, as well as “diligently paying all their tax obligations”.
The SPOA warned that the changes would trigger a “catastrophic decline of the plant-hire industry”.
Placing inheritance debt on the business would add to financial risk in the event of a downturn, it added.
SPOA president John Sibbald said: “We fear for the plant-hire industry in Scotland.
“Due to [companies’] year-on-year investment [in new plant equipment] to stimulate growth, business owners will not typically have the cash reserves for a one-off inheritance tax event.”
Mulholland warned that if families opted to close businesses, a gap would emerge in the supply chain, as big contractors would not keep expensive, specialist equipment that might be rarely used.
“A lot of our firms fill a niche market; big firms don’t have the knowledge or the locations,” he said.
The SPOA is urging the sector to lobby the government on the issue through a CBI survey, which closes on 17 November.
A Treasury spokesperson told CN: “With our public services crumbling, a £22bn fiscal black hole, and 53 per cent of Business Property Relief going to the 4 per cent wealthiest claimants, we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability to allow businesses to thrive.
“By doing this, more than half of employers will either see a cut or no change in their National Insurance bills […] and workers’ payslips will be protected from higher tax.”
