The focus for the property and construction sector budget has been on public spending rather than new tax measures. The key headlines are:
- £1.7bn dedicated upgrading local infrastructure
- £1.8bn going towards to the government’s £10bn commitment to investment in housing supply, creating over £1 million new homes
- £11.5bn Affordable Homes Programme investment between 2021 and 2026, creating a further 180,000 affordable homes. 60% of the funding for the Programme is attributable to homes outside London
- £5bn funding for remediation of the highest risk buildings with unsafe cladding to ensure those impacted feel safer and more secure in their homes
- £9m to be invested between 2022 and 2023 to create over 100 green spaces across the UK on unused land, creating and broadening accessibility
- Continued investment in the Towns Fund, regenerating c.170 high streets, town centres and communities across England
Rebecca Wilkinson, tax partner at accountancy firm, Menzies LLP, said:
“These announcements are good news for the sector as they will ensure the continuation of major construction projects. Given there was no mention of any kind of visa changes to aid construction companies, we expect to see a continued challenge with finding labour to combat shortages.”
Rebecca provided further comment on the announcements:
New property developer tax
“Whilst this was no surprise, we did not have an understanding of the detail behind this. We now know this will be a 4% levy on profits made on residential property developments within the UK. It only applies to developers with an annual profit of over £25m. The levy will be used to pay for replacing unsafe cladding on residential buildings.”
£1m Annual Investment Allowance (AIA) extension until 31 March 2023
“The AIA of £1m was due to reduce from 1 January 2022. This extension of the higher limit will particularly benefit those in the property fit-out sector., providing customers with tax relief on qualifying capital items quicker and ultimately making fit out work more reasonably priced. It should also help businesses that might be considering doing major fit outs due to shortages of both labour and supplies.”
Residential property disposals – extended payment deadlines for payment of capital gains tax (CGT)
“Following the sale of a residential property, the current payment deadline is 30 days. To pay the tax, taxpayers have to set up a gateway account at HMRC, which takes time to process and consequently taxpayers often struggle with the 30-day deadline hard to meet. The extension allows tax payers greater time to comply with their tax obligations.”
The announcement of new business rates reliefs is also welcomed. “This is great news for the sector as it helps maintain confidence in the high street. This should encourage continued investment throughout towns” said Rebecca.
- Up to 400,000 hospitality, leisure and retail properties will be eligible for £1.7bn of temporary business rates reliefs next year
- A new business rates relief, coming in in 2023, will support investment in property improvements. This will see that no business faces higher business rates bills for a year after making qualifying improvements to a property that they occupy. The hope is that this encourages businesses to invest in improving buildings and ultimately creating work for the property sector.