Top finance tips for the construction sector

The construction sector has experienced a sustained period of challenge, the weak period of trading many experienced Q2 to Q3 2020 due to Covid has caused finance challenges to continue. Whilst some of these challenges were relieved by good cash management, payment holidays and changes to compliance requirements, the upcoming 2021 Budget announcement and the ongoing Covid problem means now is the time to ensure you are best placed to overcome any impending hurdles.  

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Construction Reverse Charge upcoming changes – Q&A

Important VAT changes are coming to the construction and property sector from 1 March 2021. The Construction Reverse Charge is being introduced, changing who is responsible for accounting for VAT in relation to certain supplies.

But what does this mean? AAB’s Alistair Duncan, Indirect Tax specialist at AAB, hosted a Q&A on LinkedIn answering the most important questions surrounding the change. We’ve summarised the questions and answers below.

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2020 Year in Review – Construction & Property Sector

2020 will undoubtedly be remembered as the year of ‘unprecedented’ challenges and change, for individuals and businesses across all sectors, particularly in Q1 and the start of Q2.

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Breaking News – Implementation of Construction Reverse Charge Delayed until 1 March 2021

HMRC have confirmed this morning in Revenue and Customs Brief 7 that the implementation of the Domestic Reverse charge has been delayed for a further 5 months.  The new implementation date is 1st of March 2021. Please click to read our previous blog on domestic reverse charge and the HMRC brief published this morning.

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COVID-19 Sector Specific Support

*Updated 8 May*

As well as the Government support measures for businesses regardless of sector in the UK, there are also a number of sector specific support packages available which we have listed below.

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Extensive VAT changes for the Construction Industry – Are you ready?

When the Chancellor Phillip Hammond announced measures to combat fraud in the construction industry, many would have pictured a joiner or plumber in their white van taking cash for jobs in suburban housing estates across the country. However, the target of the new Construction Reverse Charge couldn’t be further from that.

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R&D Tax Relief in the Construction Industry

In 2017 it was reported that the construction industry contributed £113bn to the UK economy. As one of the large drivers behind the UK economy, it is surprising how little is claimed back by construction businesses through Research and Development (“R&D”) tax relief.

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Important VAT Changes – Construction Reverse Charge

Important VAT Changes – Construction Reverse Charge

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Construction Industry Scheme – The Costs of Building It Up and Getting It Wrong

Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HMRC. The deductions count as advance payments towards their tax and national insurance bill. Contractors must register for the scheme, but subcontractors do not have to register, although deductions are taken from their payments at a higher rate (30% rather than 20% or 0%) if they are not registered. Payments made must be declared to HMRC by the contractor filing monthly returns that are submitted online by the 19th of every month.

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Scottish Budget Update – LBTT for Commercial Property Transactions

Finance Secretary Derek Mackay has announced that the Scottish Government intends to reduce the lower rate of Land and Buildings Transaction Tax (“LBTT”) for non-residential property transactions, whilst increasing the cost for higher value property acquisitions.

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