Property & Construction sector Spring Budget predictions from Menzies LLP,
one of UK’s leading accountancy and strategic advisory firms
Chancellor Jeremy Hunt will set out the Government budget to Parliament on Wednesday, 6 March. With the General Elections drawing close, it’s expected that the upcoming changes will focus more on individuals, rather than to businesses and corporates, to sway voters in the Conservative party’s favour.
Given the pressing needs of businesses, prioritising tax cuts should be crucial. But it’s also important that the Government take a balanced approach, given the limited scope for further cuts particularly in light of mounting government debt.
Rebecca Wilkinson, Tax Director and Property & Construction sector Specialist at Menzies LLP, has outlined her top wishlist items and predictions for the announcement next month.
Menzies’ predictions and wishlist for the Property & Construction sector
As we have seen in the news recently, the number of insolvencies in the construction sector is increasing significantly and the housebuilding sub-sector is the worst hit. This is due to the weak demand for new homes, which is caused by higher interest rates and the general cost of living crisis. The Help to Buy scheme ended in 2023 and I would like to see the scheme either extended or re-imagined with a view to providing stimulus in the housing market.
Home improvement projects are also stalling. A possible way of increasing demand could be to offer incentives to home-owners and landlords who spend money on improving the energy efficiency of residential properties, or offering enhanced cap al allowances to businesses that spend money on green technologies.
In the residential rental sector, there is an increase in the number of private landlords suffering rent arrears as lower income tenants struggle to pay rents. Many landlords are also paying higher interest charges and the combined result is an increasing number of landlords in arrears on their mortgages, forcing many to sell up. A decreasing stock of private rental housing could be disastrous for low-income families as there is also a lack of available social housing. I would like to see the Government reconsider the punitive tax rules which restrict the amount of tax relief that individual landlords can claim on their interest costs.
Overall, it will be helpful to see if there is a strategy in place to stimulate the property market. We would also like to see another Stamp Duty holiday, or the stamp duty surcharge scrapped. We also know the Capital Gain Tax (CGT) allowance is due to be reduced from £6,000 to £3,000 in April 2024 so this could be delayed or scrapped.
For more information about Menzies LLP, visit www.menzies.co.uk.
