SEARCH PEOPLE ABOUT US CAREERS PAYMENT PORTAL CLIENT PORTAL AUTUMN BUDGET COVID SERVICES SECTORS INSIGHTS CONTACT US PROPERTY & CONSTRUCTION HOME - PROPERTY & CONSTRUCTION WHAT’S IMPACTING PROPERTY & CONSTRUCTION The UK property and construction sector encompasses a wide range of businesses from small scale buy-to-let investors to multi-national construction groups. Over recent years the sector has seen many changes, in particular the changing tax rules. The general economic environment and political uncertainty have had a significant impact on the sector. On the up-side, the government has shown commitment to supporting the development of new housing and infrastructure, opening up opportunities to develop and invest in different types of property. New technology and innovative build techniques bring exciting new advancements to the sector and property is still regarded as a safe investment in the long term. FAQS ON THE VAT FOR CONSTRUCTION DOMESTIC REVERSE CHARGE RULES FROM 1 MARCH BLOG BUDGET 2021 RESPONSE: A NOTEWORTHY FOR THE PROPERTY & CONSTRUCTION SECTOR READ MORE GOVERNMENT ANNOUNCE NEW LEVY AND NEW TAX FOR DEVELOPERS On 10th February the Government announced a five point plan to bring an end to unsafe cladding which includes two changes to taxation for developers. No real details were announced regarding the new forms of taxation but from the information available it would appear that this is expected to take the form of a ‘Gateway 2’ Levy, with a new tax to be introduced from 2022. GOVERNMENT TO BRING AN END TO UNSAFE CLADDING WITH MULTI-BILLION POUND INTERVENTION The levy will be applied when developers seek permission to develop certain high-rise buildings in England so would be targeted to certain developments. However it would appear that the new tax , which is expected to raise at least £2 billion over a decade, will apply more widely to all UK residential property developers irrespective of whether they have been involved in high-rise projects on the basis that all developers will benefit from the restoration of confidence into the UK housing market. The devil will be in the detail and there is reference in the plan to ensuring ‘the largest property developers make a fair contribution’ so perhaps the tax will be aimed at the larger developers, maybe only applying if turnover/profits exceed a certain level. For now we must await the consultation. CORONAVIRUS UPDATE: THREE MONTH RENT HOLIDAY FOR COMMERCIAL TENANTS Commercial tenants who miss rent payments because of Coronavirus in the period until 31 March 2021 (extended from June 2020) will be protected from eviction. These measures, were included in the latest draft of the emergency Coronavirus Bill currently going through Parliament and so would take effect from the date the bill receives Royal Assent. As commercial tenants will still be liable for the rent after this period, the Government has said it will continue to speak to commercial landlords and review the impact that the measures are having on their cash flow. As tenants may be required to settle any arrears on expiry of this period, they should consider the impact that this will have on their cash flow, and if necessary, open discussions with their landlord as soon as possible. If you require advice regarding your cash flow management, please contact your Menzies representative who will be happy to help. ACCESS MORE PRACTICAL BUSINESS ADVICE FOR CORONAVIRUS (COVID-19). BLOG VAT FOR PROPERTY DEVELOPERS IN A MARKET SLOW DOWN READ MORE THE COVID-19 EXIT STRATEGY – WHAT’S YOUR PLAN? READ MORE SUPPORTING THE PROPERTY AND CONSTRUCTION SECTOR Ralph Mitchison – Property and Construction sector specialist We advise commercial and residential developers, contractors, owners and investors, as well as sector-dependent clients. We work closely to find solutions to industry issues, utilising our expertise in everything from business strategy and corporate finance, to audit and tax advice. DOWNLOAD MENZIES SECTOR BROCHURE. GUIDES RESIDENTIAL PROPERTY DEVELOPER KPIS READ MORE KEY CHALLENGES FOR THE PROPERTY AND CONSTRUCTION INDUSTRY This sector has experienced real challenges of late. Growth has been subdued, with issues of housing supply, scarcity of affordable land, tax changes, and planning approvals remaining a problem. PROFESSIONAL SERVICES The property and construction sector comprises a wide range of professional services including architects, surveyors, planners and estate agents. Advice is commonly sought to ensure the business is adequately structured to help with succession or exit planning. This planning may be linked to tax efficient remuneration strategies which can help ensure that key individuals are retained within the business. Other tax reliefs should not be overlooked. For example, R&D relief may be relevant but is often overlooked by professional services firms. OVERSEAS INVESTORS Some of the biggest tax changes in recent years have impacted overseas investors of UK property bringing them into the UK tax regime for the first time. The UK is still an attractive investment and exchange rates have benefitted overseas investment but the uncertain economic climate has definitely impacted the very high value property market. The structure of holdings and types of investment can result in very different outcomes, and although tax should not drive the commercial objectives, obtaining good advice is key. LOOKING TO EXPAND YOUR PROPERTY BUSINESS OVERSEAS OR INVEST IN THE UK? CLICK HERE. CONSTRUCTION With ever tightening margins, strong finances are essential for construction companies. The workforce required to undertake projects has been hit by uncertainty due to Brexit and changes to pay requirements, such as increases in the national minimum wage and an expansion of the IR35 rules. There are also specific tax requirements such as CIS and upcoming changes to the VAT rules. Training and development of employees is important to ensure staff retention at a time when demand for workers is outstripping supply. To gain a competitive edge, businesses should look at introducing tax efficient employee incentives or rewards. UK INVESTORS UK investors, both individuals and corporates, have been hit hard by tax changes, particularly with residential properties. These changes include the ATED rules, increased Stamp Duty Land Tax, the introduction of the Stamp Duty surcharge (3%), changes to tax relief for interest, and for individuals, residential property gains being excluded from the reduced capital gains tax rates. Further changes are coming in April 2020 with more under consultation To maximise returns and avoid any pitfalls existing investment structures should be continually reviewed. For new investments tax advice at the outset can ensure the most tax-efficient structure and maximise returns. DEVELOPERS To be successful, developers need to maximise the output from the land and buildings developed. This may sound simple but in recent years margins have been squeezed for many reasons. In addition, stock can take longer to sell resulting in potential cash flow problems jeopardising the business. Strong finances are key to both survival and success as they allow flexibility and agility in the market. Better finances mean greater buying power which in turn can ensure land is more easily obtainable, opportunities actionable, and therefore decisions are not taken out of the business’s hands. Good financial information and cash flow forecasts, ensuring budgets are set and managed are crucial. The ever-changing tax rules need to be understood and built into the plans and structure of the business. Any tax reliefs such as land remediation relief, capital allowances or even R&D relief, should be claimed where available. NEED SUPPORT WITH THE DAY-TO-DAY RUNNING OF YOUR PROPERTY BUSINESS, BOOKKEEPING OR REPORTING? CLICK HERE. MORE PROPERTY AND CONSTRUCTION BRIGHTER THINKING BLOG SUCCESSION OPTIONS FOR RESIDENTIAL PROPERTY INVESTMENTS READ MORE BLOG DON’T GET CAUGHT OUT BY CAPITAL GAINS TAX CHANGES READ MORE CONTACT MENZIES PROPERTY TEAM YOUR NAME * YOUR COMPANY * YOUR EMAIL * YOUR CONTACT TELEPHONE * WOULD YOU LIKE TO RECEIVE EMAIL NEWS UPDATES?* YESNO HOW DID YOU FIRST HEAR ABOUT MENZIES? * --- Internet search (Google/Bing/Yahoo/other) Social media Recommendation (friend/colleague) Recommendation (existing Menzies client) Recommendation (bank, solicitor, accountant) At an event Trade association Xero Article or blog post Advertisement SUBJECT YOUR MESSAGE SECTOR HEAD RALPH MITCHISON - FCA, CF PARTNER Ralph Mitchison is a Menzies Partner with a wealth of audit and compliance experience. Ralph also provides international accountancy and tax advisory. VIEW PROFILE SERVICE HEAD RALPH MITCHISON - FCA, CF PARTNER Ralph Mitchison is a Menzies Partner with a wealth of audit and compliance experience. Ralph also provides international accountancy and tax advisory. VIEW PROFILE PROPERTY & CONSTRUCTION Accounting Services for Architects SEND ME AN EMAIL WHEN THIS PAGE HAS BEEN UPDATED SUBSCRIBE MEET THE PROPERTY & CONSTRUCTION TEAM PROPERTY & CONSTRUCTION SECTOR INSIGHTS GET IN TOUCH WITH THE PROPERTY & CONSTRUCTION TEAM BLOG ANNUAL INVESTMENT ALLOWANCE LIMIT EXTENSION The Annual Investment Allowance (AIA) gives businesses the opportunity to [...] READ MORE PROPERTY & CONSTRUCTION PODCAST: EASING THE BURDEN OF STAMP DUTY LAND TAX Stephen Hemmings, Menzies Tax Partner, alongside Richard Turner, Senior Manager [...] READ MORE BLOG PROPERTY – AN OPPORTUNITY FOR FRAUD? 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