The UK’s Spring Budget: what’s in it for the Construction Industry?
Chancellor Rishi Sunak has set a budget that he hopes will promote an investment-led recovery for the UK as the country emerges from lockdown.
Highlights for the construction industry include the creation of eight freeport zones in England and special tax relief for companies investing in new equipment.
Lowlights include an increase in the rate of corporation tax to 25% in 2023 for businesses with profits greater than £250,000.
There are also extensions of pandemic emergency measures, including the coronavirus job support scheme (furlough) running until September 2021 across the UK and an extension to the temporary cut in stamp duty land tax in England and Northern Ireland until the same date. House-builders will also welcome the new mortgage guarantee scheme to enable all UK homebuyers secure a mortgage up to £600,000 with a 5% deposit.
Coupled with the budget announcement is the publication of the government’s plan for growth, titled Build back better. This sets out capital spending plans worth £100bn next year.
Chancellor Rishi Sunak announced in his budget statement that, beginning in April 2021, a new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment, meaning they can reduce their taxable profits by 130% of the cost. This is worth £25bn to companies over the two-year period the super-deduction will be in full effect, the chancellor said.
Eight new English Freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.
Discussions continue between the UK Government and the devolved administrations to introduce freeports in Scotland, Wales and Northern Ireland as well.
Within the freeport zones, there will be an enhanced 10% rate of structures and buildings allowance for constructing or renovating non-residential structures and buildings (excluding Northern Ireland). This means that investments will be fully relieved after 10 years compared with the standard 33 years and four months at the 3% rate available nationwide. To qualify, the structure or building must be brought into use on or before 30th September 2026.