By Nick Bairstow
Moore
THE current coronavirus crisis was the main focus of the immediate measures in the March 2020 Budget. After that, the majority of the measures announced largely focused on manifesto pledges to spend on growth, infrastructure and the regions.
The Budget was a bit of a mixed bag for those in the property and construction sector – the significant commitments made to housing and infrastructure spend should be good news for those in construction and development, but the detail is yet to be shared.
On a more immediate level, the much-trailed changes to Entrepreneurs Relief (a reduction in the limit from £10m to £1m, effective immediately, will impact property developers not already excluded from the relief.
Business rates relief
The previously announced 50 per cent retail discount for small business will be extended to 100 per cent for one year only (2020/21), as a direct response to the anticipated economic impact of coronavirus. The relief will also be extended from the retail sector to leisure and hospitality businesses.
As a result, just under half of qualifying premises in England will pay no business rates in 2020/21. This will no doubt be a welcome boost for smaller retailers and property-reliant businesses already suffering from changing consumer habits, and now further impacted by the coronavirus.
Structures and buildings allowance (SBA)
The recently introduced SBA provides straight line tax relief for expenditure – which would not otherwise qualify for capital allowances – incurred on the construction of new UK commercial buildings. The relief has been enhanced from a two per cent straight line deduction to three per cent.
The increase will be welcome for those building and owning new-build commercial buildings such as offices, warehouses, etc. It plays to government plans to incentivise those contributing to the building blocks of the UK economy by making increased relief available to those providing the built environment required to increase output. The increase is forecast to cost just over £1bn in additional tax in the period to 2025.
Construction industry domestic reverse charge
The Budget confirmed that the VAT changes planned in the construction industry sector will, as expected, be implemented from October 2020. The changes focus on where VAT needs to be accounted for in the chain of contractors, subcontractors and end users in a construction project.
The changes proposed seek to address the perceived opportunity for VAT fraud in construction projects involving multiple layers and entities. Action will be required prior to October 2020 to address accounting system changes, counterparty education and, most importantly, impacts on cash flow.
SDLT for non-residents
From April 2021, a two per cent surcharge, on top of existing rates, will be applied to all non-residents purchasing residential property in England and Northern Ireland.
This increase has been trailed and consulted on in the past, although previously it was going to be one per cent rather than two per cent. It seems unlikely that this measure will raise any significant funds (£140m is currently predicted to be received over the next five years), nor that it will dissuade material overseas investment, but it does play to the political objective of promoting home ownership. It is therefore not surprising that the previous consultation has been followed through on.
For further advice, contact Nick Bairstow from Moore Chartered Accountants and Business Advisers on 01536 461900 or visit www.moore.co.uk