After the Budget
4 March 2021
Rishi Sunak’s Budget yesterday showed the on-going economic impact of the pandemic. The chancellor said that more than 700,000 people have lost their jobs, the economy shrank by almost 10% last year.
The furlough scheme has been extended up to September, as has support for the self-employed. And a new Restart Grant from April will offer grants to businesses in non-essential retail, hospitality and leisure to help recover.
A number of announcements should help the construction and hire industries. The house purchase stamp duty ‘holiday’ has been extended to the end of June, which should encourage people to buy and renovate homes, and first-time buyers will be able to get government-backed mortgages with a deposit of just 5%.
Eight new freeports will be built at East Midlands Airport, Felixstowe and Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside. Tariffs on imported goods only become payable when they are moved somewhere else in the UK or, if sent overseas, no charges are paid. Incentives to invest in their infrastructure include reductions to the tax companies pay on their existing property, and when they buy new buildings.
In its reaction to the Budget, the HAE was disappointed that there was no further mention of the debate concerning the removal of red diesel from construction in April 2022. The Treasury has just published a report, 'Reform of Red Diesel and other rebated fuels entitlement', in response to comments received during last year’s consultation, including those from the Association.
It says that very few changes are being made to the initial proposals although a new two-year ‘super-deduction’ allowance is being introduced for qualifying plant and machinery investment. For every £100 a company spends, they will receive a tax credit of £130.
The HAE points out that it was amongst the consultation respondents who pointed out the lack of incentives to invest in often more expensive, but greener, alternatives.
Rob Oliver CEO of the Construction Equipment Association (CEA) commented that “the ability to carry back company losses for three years against earlier profits will also help the cash flow of many companies.
“We look forward to reviewing the details, but on the face of it, it looks like it will be a great time to renew the machine fleets of plant hirers and contractors. These tax concessions are clearly a quid pro quo for swallowing a corporation tax hike in the future.”
Rishi Sunak announced the formation of a UK Infrastructure Bank with an initial capitalisation of £12bn to stimulate investment of £40bn. The CEA says it welcomes this as a way of leveraging additional investment in green construction projects.