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The trade association points out that the vast majority, 85% of its 350 members, are private independent companies which continually reinvest in their businesses by employing local people including apprentices, pushing forward carbon reduction targets with new equipment investment year after year, and diligently paying all their tax obligations. These companies are also a key part of their local communities.
Rather than a Budget of ‘growth’ as heralded by the Chancellor of the Exchequer, the SPOA fears that the measures introduced will trigger a catastrophic decline of the plant hire industry.
John Sibbald, President of the SPOA, explains: “Now that the dust has settled and the Scottish Plant Owners Association has had time to take stock of the recent Budget announcements, it is with dismay and without hyperbole that we fear for the plant hire industry in Scotland.
“The recent Budget was described as one of growth, however, we fear that the economic impact of many of the policies will do the exact opposite in our industry. It is our strong belief that it is not possible to grow the economy through such high levels of taxation, soon to come into force as a result of the Autumn Budget. We are therefore calling on all of our members to lobby their local MPs to highlight the risk to the plant industry in Scotland which employs over 42,000 people and contributes £7.4bn to the economy.”
The key areas which the SPOA believes will irreversibly change the plant industry and which will form the basis of its lobbying campaign are as follows:
The removal of 100% Business Property Relief (BPR) and Agricultural Property Relief (APR):
SPOA members are predominantly private independent companies which are heavily invested in expensive assets and property, which take them significantly over the £1m allowance for 100% BPR or APR.
Due to this year-on-year investment in their business to stimulate growth, business owners will not typically have the cash reserves for a one-off inheritance tax event. In order to generate the cash to pay for this tax, SPOA members will likely be forced to sell all or part of their business. Firstly, there would be an impact on the pool of likely buyers and the valuation of the business effectively being forced to sell. Secondly, it would result in redundancies as administrative functions would be combined regardless of the buyer. Worst case scenario, it could take jobs out of Scotland.
Those businesses that are able may choose to burden their company with additional debt to pay off the Inheritance Tax (IHT) liability. This will only serve to curtail future growth and stability of the business.
Some businesses may decide to sell all their assets at auction. This would lead to the closure of the company and redundancies, after generations of providing employment in a community.
Whilst many will argue that it is possible to transfer a business seven years before death and incur no charge, the burden simply passes to the next generation. No amount of planning can safeguard against the unknown and an unforeseen, sudden event could leave a company and its employees stricken.
The increase in employers National Insurance (NI) contribution, the reduction in the NI thresholds and the increase of the minimum wage:
These measures will affect all industries and the SPOA fears that these measures are unlikely to be reversed due to that additional income boost to the Treasury.
It is an unfortunate reality of running a business that management will need to look for efficiencies in headcount, pay awards and growth plans in addition to rate increases likely leading to further inflation. The plant industry is no exception to this and the SPOA fears the worst.
Double cab pick-ups no longer being classed as goods vehicles:
As far as the SPOA is concerned, double cab pick-ups are essential for the plant industry, allowing safe towing of plant machinery and making it easier to access sites on forestry and agricultural land. They most certainly are not used as ‘Chelsea tractors’ or standard SUVs. This is another unnecessary blow to the industry resulting in higher tax burdens.
The SPOA is highlighting the survey developed by the CBI in response to the Autumn Budget and is calling on its members to complete it by Sunday 17th November.
The survey can be accessed here:
CBI Budget impact survey: Employers’ National Insurance and Business Property Relief