What the recent UK budget really means for your trade and construction sector clients
After a busy few weeks focusing on onboarding all our new partners from Xerocon the Tradify team has finally had an opportunity to reflect on the recent budget and the implications for businesses in the trade and construction sector.
It’s fair to say that broadly speaking the budget was a bit of a non-event for the trade sector. In particular, the budget could have done a lot to tackle the chronic labour, skills and productivity issues impacting the sector but it seems that right now the government is happy to kicks those challenges down the road while they focus elsewhere.
For the meantime though, there were some announcements in the budget that will be of note to those accountants focused on the trade sector.
Significant funds have been set aside for projects across a broad spectrum of infrastructure from roads, to rail, to prisons and health. Major allocations include £37m and £20m for Northern Powerhouse Rail and East West Rail respectively. Funding is being increased for the NHS which should bring refurbishment and new builds and £25.3bn were allocated to the second Road Investment Strategy (RIS2).
Building more houses is great for those looking to get on the property ladder and it’s also great for local trade business. While Help to Buy was not specifically mentioned in the chancellor’s speech, the documents revealed it would in fact be extended by two years to 2023 – albeit with some restrictions. Other announcements included an extra £500m for the HIF and a £650m partnership with nine housing associations that will run until 2021/22 and aim to deliver 13,000 homes.
The decision to delay the implementation of IR35 until April 2020 was welcomed by plenty of businesses in the trade sector. Given how problematic this change was for the public sector it's probably no surprise and will give lots of businesses some breathing room to deal with other issues such as CIS, MTD and Brexit.
National living wage increase
The increase in the National Living Wage by 4.6% from April will be the item that will have jumped out at lots of businesses in the trade sector and particularly those in the facilities management industry.
A £695m funding package announced as part of the budget will go some way to improving things in a woefully underfunded part of the trade sector. The government aims to train three million new apprentices during this parliament. To support this goal, the government plans to spend up to £240m to cover the cost of SMEs being able to reduce the amount they contribute towards training apprentices from 10% to 5%.
While a relatively minor change in the scheme of things the increase in the annual investment allowance (AIA) for qualifying plant and machinery is rising from £200k to £1m from 1 January 2019 which should encourage some business owners to reinvest and install new technology and equipment.
Company van benefit
Another relatively minor change is the decision to increase the van benefit charge by the Consumer Price Index and the car and van fuel benefit charges by the Retail Price Index from 6 April 2019. The flat-rate van benefit charge will increase to £3,430, the multiplier for the car fuel benefit charge will increase to £24,100, and the flat-rate van fuel benefit charge will increase to £655.
Construction sector reverse charge
Buried in the budget was an update and confirmation that the reverse charge will come into force on 1 October 2019 as originally planned and that the reverse charge will cover more than just construction services.
The impact of the above announcements on the average 3-5 person business operating in the trade sector is probably relatively minor and only of interest to the accountants who specialise in the trade sector.
Rather than looking to the budget to help make 2019 a success, any business owner/manager in the trade sector would actually be better off working with their accountant to get MTD ready by shifting on to a cloud accounting product and then bolting on Tradify.
Tradify is a workflow app that helps trade businesses schedule and track jobs and when combined with a cloud accounting software business owners typically see increases in profitability and productivity. If you would like to know more about how Tradify can help add value to your clients in the trade sector then check out our website at Tradifyhq.com.