Autumn Statement 2023: Tax Changes for Construction and Real Estate

The 2023 Autumn Statement delivered by Chancellor Jeremy Hunt brought relatively few tax changes for the Construction and Real Estate (C&RE) sector.

Full Expensing Extension

Under this significant development, the Chancellor declared the extension of full expensing for plant and machinery. This means developers continue to receive comprehensive tax relief in the year of their machinery acquisitions. Notably, this allows companies to curtail their tax expenditure by an impressive 25p for every £1 spent. Originally introduced in April 2023 with a planned three-year tenure, this relief is now slated to be a permanent fixture. However, it’s essential to note that permanence does not equate to immutability, as the landscape of tax-efficient investments in plant and machinery has witnessed frequent adjustments in recent years.

CIS Revisions Aimed at Encouraging Compliance

The Construction Industry Scheme (CIS) also undergoes notable revisions in the aftermath of the Autumn Statement. These changes primarily seek to foster compliance among subcontractors, particularly concerning their VAT obligations. In a parallel move, payments from landlords to tenants will be excluded from CIS in most instances, signalling a shift in the scheme’s scope.

Challenges for Property Investors: A Continuing Trend

In line with recent trends, property investors faced a setback as no favourable changes were announced. The absence of measures aimed at stimulating the availability of rental properties left many disappointed.

Looking Beyond Taxes: Planning System Reform

Beyond tax-centric measures, Chancellor Jeremy Hunt also unveiled plans to reform the planning system, aspiring to expedite the process. If successful, this could prove to be a game-changer for many in the sector, potentially overshadowing the immediate impact of tax changes.

For more information on the announcements made in the Autumn Statement 2023, you can read our summary. Additionally, if you have any enquiries about the Autumn Statement and its impact on the C&RE sector, please feel free to contact our Construction and Real Estate team on 01293 227670.