Tax updates for the construction sector
There are a number of specific taxes and reliefs that impact businesses in the construction sector. We’ve highlighted a few of the more noteworthy ones below.
From April 2021, companies can claim a super-deduction which provides additional tax relief when purchasing new plant and machinery. This tax relief is expected to end in March 2023 so it’s well worth planning to make the most of this opportunity while it’s available.
For example, a contractor spending £500,000 on new machinery can get tax relief of up to £123,500 (24.7%) compared to the usual £95,000 (19%) where the Annual Investment Allowance is available.
There are some points of detail to be aware of so please speak to us when planning this expenditure to ensure it’s structured as tax efficiently as possible.
The Treasury held a public consultation which ended in July 2021 for a proposed new ‘Residential Property Developer Tax’, nicknamed ‘Cladding Tax’.
In the recent Autumn Budget it was confirmed that the government will impose a 4% tax on developers with profits exceeding £25 million per annum. The plan is that the new tax will help raise £2 billion to fund the government’s remediation programme for unsafe cladding. This tax should only impact the larger developers.
There has been an increased number of SDLT cases moving through the courts recently. Interesting conclusions are being drawn by judges which will have an impact on taxpayers, the main areas of interest being:
- Multiple Dwellings Relief – where the purchase of residential properties with annexes which are deemed inadequate to claim this very valuable relief;
- Mixed-Use Purchases – where the non-residential part of the property or grounds is not considered sufficient to support the lower rates of non-residential SDLT.
These areas are now being reviewed and challenged by HMRC more than ever and the goalposts are shifting as a result of these cases.
It’s essential any SDLT planning is carried out ahead of a purchase taking place in order to put taxpayers in the best position.
Read more on this topic in the first issue of our newsletter South East Property.Read South East Property Issue 1