Tax breaks, VAT checks and planning reforms – what construction firms can look forward to in 2024

Let’s review some of the key takeaways from chancellor Jeremy Hunt’s Autumn Statement and what the industry had to say about it… 

Tax 

• From April 2024, Class 2 National Insurance (NI) abolished for the self-employed earning £12,570 or more 
• Also from April, Class 4 NI (self-employed) reduced to 8 per cent 
• From January, NI main rate cut from 12 per cent to 10 per cent 
• Subcontractor VAT records to be checked as part of CIS compliance 

Business 

• Permanent ‘full expensing’ tax break on new plant and machinery 
• Faster planning decisions for major applications in England  
• Levelling Up: £80 million for regeneration in Scotland 
• £32 million to tackle planning backlogs and unlock “thousands” of new homes 
• £50 million for apprenticeships 

New Permitted Development Rights (PDR) announced will enable one house to be converted into two homes. 

New Investment Zones are planned for the West and East Midlands, Flintshire and Wrexham, and Greater Manchester. 

Economy 

• Economy to grow by 0.7 per cent in 2024 and 1.4 per cent in 2025 
• Inflation to fall to 2.8 per cent by the end of 2024 
• 110 measures planned to boost economic growth 

‘One eye on the General Election’ 

Construction Products Association (CPA) economics director, Noble Francis, said the cut to National Insurance and ‘full expensing’ for businesses were the main headlines. 

He added, however, that while the Autumn Statement marked “a step in the right direction” for the construction industry, it was made with “one eye on the General Election next year”. 

Gleeds CEO Graham Harle said the changes to National Insurance are worth “little more than a few hundred pounds” for the average self-employed tradesperson. 

Adding full expensing plans were to be welcomed – but that it only really benefits companies required to buy plant and machinery. 

He also said £50 million for apprenticeships is a “meagre” sum from a government with “little insight” of the industry. 

While Eddie Tuttle, director of policy, external affairs and research at the Chartered Institute of Building (CIOB), welcomed the investment in apprenticeships – but was “unclear” how far this would benefit the construction sector. 

He also asked if the National Insurance relief initiative could be extended to organisations that employ ex-offenders, to help with shortfalls in labour. 

National Federation of Builders (NFB) chief executive, Richard Beresford, welcomed much in the chancellor’s statement including changes to planning and permitted development as well as full expensing, adding the government was ‘taking economic growth seriously’. 

Expert comment in full 

Gleeds CEO Graham Harle said: “This was an autumn statement by a government that appears to have little insight into the challenges faced by those working in property and construction, having shuffled 16 housing ministers in 13 years and just cancelled HS2.  

“Of the measures announced, ‘full expensing’ is to be welcomed but is only helpful if you have projects requiring you to buy plant and machinery. It doesn’t help firms struggling to make a profit or investing in people. It’s all jam tomorrow and while planning reforms sound appealing, they take time to implement and may not be supported by any future government.  

“Reducing business rates is helpful for a struggling retail sector and abolition of aspects of National Insurance for self-employed tradespeople looks good but is worth little more than a few hundred pounds for the average plumber or electrician.  

“Where was the VAT relief on the greening of housing stock when over 31 million people live in buildings that meet sub-standard EPC ratings and £50 million to support apprenticeships is meagre. We were promised 110 measures to help industry but in fact there was little there to inspire confidence and stimulate investment.” 

Richard Beresford, chief executive of the National Federation of Builders, said: “It has been some time that a chancellor played prime minister by linking the importance of regulatory reforms with growth, and it is hugely welcomed. For decades, business has felt increasingly dictated to, rather than enabled and we hope this is a sign of much-needed direction change where business is enabled to innovate and invest, rather than placated with tax cuts. 

“The announcements to cut self-employment taxes, increase investment in housing, regulatory reforms on the grid and permitted development, funding for nutrient neutrality and an acknowledgement that commercial premises should not be stifled by planning permissions all showed that the government is taking the environment for growth seriously. 

“Additionally, investments in EV charging infrastructure, the expansion of technical skills, an increase in minimum living wages, the permanency of full expensing, and Back to Work plans also make for an interesting mix of strategies that will please many. 

“Even housebuilders were given a glimmer of hope, signalling that the government is taking their challenges seriously.” 

Eddie Tuttle, director of policy, external affairs and research at CIOB, said: “We are pleased to hear the Office for Budget Responsibility (OBR) forecast shows strong economic growth across the UK. However, to truly capitalise on this success, issues within key sectors such as the construction industry must be addressed. 

“One of the biggest issues facing the construction industry is the skills shortage. In fact, Construction Industry Training Board (CITB) research recently revealed nearly 45,000 extra workers are required each year just to meet construction demand by 2027. 

“While CIOB welcomes the government’s commitment to invest £50 million in apprenticeships for key sectors like engineering, it is unclear whether the construction sector more generally, which has traditionally been reliant on apprentices as one way of generating new employment, is included in this investment, particularly when shortages are prevalent and have been highlighted across the industry. 

“We were also interested to hear the chancellor’s plans to extend National Insurance relief for employers who take veterans on their payroll. While we support the importance of this scheme, we would also be keen to understand if it could be extended to include relief for organisations which take on ex-prisoners as employees for example. 

“Ministry of Justice figures state just 17 per cent of people with criminal convictions get a job within a year of release from prison and CIOB believes relieving National Insurance for employers recruiting ex-offenders could go a long way in increasing this figure. 

“The chancellor also discussed further changes to Permitted Development Rights to increase the number of new homes. We have long argued that delivering new homes should not be solely a numbers game and it is vital to ensure any new home delivered is of the highest standard, including quality. CIOB is particularly keen to understand further details behind the chancellor’s comments on PDR and we would like to know how this will impact the quality of new homes. 

“We will follow all of these points up with relevant ministers in order to continually push for better outcomes for the construction sector as a whole given the importance and economic leverage of the sector to UK PLC.” 

CPA economics director, Noble Francis, said: “With one eye on the General Election next year, this was always likely to be an Autumn Statement primarily aimed at helping working households and businesses.  

“Jeremy Hunt highlighted that lower personal and business taxation will play a central role in the Conservative party’s approach for next year’s election and gave more clarity to the government’s updated approach to boosting growth.  

“A cut in the National Insurance rate from 12 per cent to 10 per cent and ‘Full Expensing’ for business investment were the two key headlines from the chancellor’s speech in the House of Commons. 

“For UK construction product manufacturers, it is the ‘Full Expensing’ announcement that will resonate most with them. CPA was a key part of the letter calling for this measure to be made permanent and is pleased to see this confirmed today. This will allow companies to invest in the UK to reduce their tax by up to 25p for every £1 they spend on plant and machinery.  

“Other announcements today that will also be of interest to our industry include more funding for apprenticeships and skills; planning reforms to allow councils to recover the full costs of planning applications – provided they meet prompt deadlines; a consultation on allowing any house to be converted into two flats – provided the exterior is respected; speeding up and providing more certainty for developers and investors on infrastructure delivery; support for strategic manufacturing sectors, manufacturing SMEs and green industries; [and] new Investment Zones announced in the Midlands, Manchester, and Wales. 

“While these announcements are helpful, the chancellor could have gone further with industrial policy by providing a clearer strategy on key growth areas. Equally, more could be done on housing supply and home buying, as well as energy efficiency in housing such as introducing a green stamp duty.  

“While the announcements on improving infrastructure delivery are welcome, how effectively they will translate into reality on the ground is yet to be seen. The government published a policy paper ‘Getting Great Britain building again: Speeding up infrastructure delivery’, which demonstrates that it finally understands the difficulties associated with delivering major infrastructure projects. It is disappointing, however, that government hasn’t published an updated National Infrastructure and Government Construction Pipeline since September 2021 and announced in the Autumn Statement that there also won’t be a revised National Infrastructure Strategy until next year.  

“This lack of certainty over the project pipeline means that it is difficult for all firms in the construction supply chain to justify signing-off significant new investments in skills and capacity, especially after all the government announcements of infrastructure projects being paused, delayed and cancelled this year. 

“This Autumn Statement marks a step in the right direction from government for the construction industry, but how much of it is electioneering as opposed to real action is not yet clear.” 

Thomas Vandecasteele, MD, Legendre UK, said: “Despite positive steps outlined in the Autumn Statement, the government’s approach lacks the necessary ambition to introduce the crucial changes needed to address the housing crisis.

“The allocation of £32 million across housing and planning, including £5 million for the DLUHC’s Planning Skills Delivery Fund, is commendable. However, for those closely engaged with developers, it’s clear that more extensive reforms are necessary to overcome the persistent challenges in the development pipeline, particularly within the planning system and resources.

“The absence of clarity on key issues, such as Building Safety and regulations concerning second staircases, raises concerns. Clear guidance in these areas is crucial for developers and local authorities to navigate the planning landscape effectively. The lack of a review of grants for Housing Associations (HAs) is equally disappointing, given their pivotal role in providing affordable housing.

“While the statement outlined initiatives like the Affordable Homes Guarantee Scheme and the extension of the Public Works Loan Board, it fell short of delivering crucial elements of growth for the industry. Addressing the limitations in the current planning system and providing clarity on key regulatory issues will unlock the full potential of the housing market and meet the needs of communities effectively.”

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