Development contractor sector set to shrink in 2023

The most recent analysis by tax specialists, RIFT Tax Refunds, reveals that whereas 2023 is forecast to see a rise within the variety of companies working throughout the building contractor sector, the entire market measurement based mostly on income is predicted to see a -1.3% 12 months on 12 months decline.  

RIFT Tax Refunds analysed the market measurement of the sector based mostly on income, in addition to the variety of operational companies, to see how the development contractor trade is faring following a problematic pandemic interval. 

Variety of companies

The excellent news is that the sector has gone from power to power the place the variety of operational companies is worried. 

In 2022, the variety of building contracting companies throughout the UK sat at 93,590, having elevated by 1.6% 12 months on 12 months and 9% versus the pre-pandemic whole seen in 2019. 

The truth is, the analysis by RIFT Tax Refunds reveals that this quantity has been on the rise yearly since 2013 and is predicted to climb by an additional 1% in 2023, to a complete of 94,545. 

Declining market measurement

It’s extra of a blended image when analysing the entire market measurement of the sector based mostly on income. 

The sector had additionally gone from power to power on this respect, climbing yearly between 2013 and 2020, when it peaked at £177.4bn – a rise of 53% versus 2013. 

Nevertheless, the market measurement of the sector then contracted by -18% in a single 12 months falling to £145.9bn in 2021, because the issues of the pandemic hit dwelling.

The excellent news is that 2022 noticed a partial return to kind, with a 19% enhance bringing the general market measurement of the development contractor trade again to £173.8bn – albeit nonetheless -2% under the sector’s pre-pandemic peak. 

However with the financial panorama remaining an unsure one, the information from RIFT Tax Refunds counsel that 2023 might see a marginal 1.3% discount in whole market measurement, dropping to £171.6bn this 12 months. 

Bradley Publish, MD of RIFT Tax Refunds, mentioned, “Development contractors present the spine for the UK building trade and so it’s hardly shocking that the variety of companies in operation has climbed over the past decade. Nevertheless, whereas that is optimistic in itself, whole revenues generated have been much less constant because of the truth that the sector has been prone to the broader affect of the pandemic and, extra not too long ago, a struggling economic system.

So it’s heartening to see that in the present day the trade has managed to make a big restoration following the sharp decline seen in 2021 because of Covid. 

Nevertheless, whereas the sector seems in pretty good condition, it’s but to return to its pre-pandemic finest and, in actual fact, we count on whole revenues to contract barely this 12 months. 

For these contractors working throughout the sector, this might imply a discount in incomes alternatives and so making each penny depend is crucial as additionally they battle the price of dwelling disaster. 

The excellent news is that building contractors are probably the most more likely to be owed a tax refund by HMRC because of bills incurred because of journey, uniforms and extra. Our knowledge reveals that the typical refund owed is simply over £2,000, having elevated by 6.3% within the final 12 months alone.”