The key impacts of the statement on the real estate and construction sectors are the following:
Full Expensing of Capital expenditure: the introduction of 100% relief for qualifying capital expenditure on plant and machinery was due to come to an end on 31 March 2026. This relief (and 50% relief for expenditure on qualifying integral features) is now permanent. While the acceleration of relief on capital expenditure is welcome it is an acceleration and a timing benefit.
Construction Industry Scheme (CIS): Following consultation there are a number of technical changes to the CIS, regulations are still to come but these will include:
- A welcome plan to remove the majority of payments from landlords to tenants from the scope of the CIS.
- An expansion of the grounds to cancel a sub-contractors Gross Payment Status (GPS). In particular, VAT will be added to the taxes where HMRC is able to immediately cancel GPS if they have reasonable grounds to suspect that the GPS holder has fraudulently provided an incorrect return or information. Given the cashflow implications for contractors not having GPS, this will heighten need to ensure their tax affairs are in good order.
UK Real Estate Investment Trusts (REITs): The UK REIT regime has been in place since 2006. There are a number of technical changes introduced to the scheme to modernise it.
Inflationary uplifts: There have been a number of increases in rates, of note:
- The National Living Wage will increase by 9.8% to £11.44 an hour with the age threshold lowered from 23 to 21 years old, potentially increasing labour costs for employers.
- The Annual Tax on Enveloped Dwellings (ATED) for enveloped UK residential property worth more than 500k will be uprated by the September CPI figure of 6.7% for the 2024-25 ATED charging period. This will impact those owning properties in companies which they use personally.
Planning: There were several non-tax plans announced to encourage building and development. These include
- A new premium planning service (for additional cost) at local authorities across England with guaranteed accelerated decision dates for major applications.
- Reforms to deliver infrastructure quicker.
- A consultation on a new Permitted Development Right for subdividing houses into two flats without changing the façade.
- There were a number of other increases in government funding to boost investment in infrastructure and housing.
The key impacts of the statement on the real estate and construction sectors are the following:
Full Expensing of Capital expenditure: the introduction of 100% relief for qualifying capital expenditure on plant and machinery was due to come to an end on 31 March 2026. This relief (and 50% relief for expenditure on qualifying integral features) is now permanent. While the acceleration of relief on capital expenditure is welcome it is an acceleration and a timing benefit.
Construction Industry Scheme (CIS): Following consultation there are a number of technical changes to the CIS, regulations are still to come but these will include:
- A welcome plan to remove the majority of payments from landlords to tenants from the scope of the CIS.
- An expansion of the grounds to cancel a sub-contractors Gross Payment Status (GPS). In particular, VAT will be added to the taxes where HMRC is able to immediately cancel GPS if they have reasonable grounds to suspect that the GPS holder has fraudulently provided an incorrect return or information. Given the cashflow implications for contractors not having GPS, this will heighten need to ensure their tax affairs are in good order.
UK Real Estate Investment Trusts (REITs): The UK REIT regime has been in place since 2006. There are a number of technical changes introduced to the scheme to modernise it.
Inflationary uplifts: There have been a number of increases in rates, of note:
- The National Living Wage will increase by 9.8% to £11.44 an hour with the age threshold lowered from 23 to 21 years old, potentially increasing labour costs for employers.
- The Annual Tax on Enveloped Dwellings (ATED) for enveloped UK residential property worth more than 500k will be uprated by the September CPI figure of 6.7% for the 2024-25 ATED charging period. This will impact those owning properties in companies which they use personally.
Planning: There were several non-tax plans announced to encourage building and development. These include
- A new premium planning service (for additional cost) at local authorities across England with guaranteed accelerated decision dates for major applications.
- Reforms to deliver infrastructure quicker.
- A consultation on a new Permitted Development Right for subdividing houses into two flats without changing the façade.
- There were a number of other increases in government funding to boost investment in infrastructure and housing.
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Real estate and construction
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7 November 2023
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