Infrastructure: A pipeline of new work
We heard from the Chancellor that several projects will keep their full investments, including Sizewell C, the Lower Thames Crossing, investments in city region transports, the Midlands Rails Hub, and the Northern Growth Corridor.
“It is positive to hear that there is continued government commitment to delivering these significant projects. We hope to see this work filtering down from main contractors to subcontractors, providing a boost for everyone in the sector.”
Skills: £1.5bn to support training & workforce entry
A major win for the sector is the £1.5 billion allocated to the Youth Guarantee and Growth Skills Levy, funding placements, training and apprenticeship training for under-25s will now be fully funded. This could help alleviate long-standing labour shortages in the construction sector.
“To deliver the infrastructure and energy projects that drive our economy, it is essential that construction firms have access to the right people and talent. So, I am very pleased to hear a commitment to funding the development of skills through the Youth Guarantee and apprenticeship programmes.”
Mansion Tax: Pressure at the top end
The new High Value Council Tax Surcharge or “mansion tax” from April 2028, will mean that properties valued at £2 million or more will be liable to a new annual charge based on the value of the property.
For property over £2 million, the annual charge will be £2,500. For property valued between £2.5 – £3.5 million, the annual charge will be £3,500 and for those properties valued between £3.5 – £5 million, the annual charge will be £5,000. Properties valued in excess of £5 million will have an annual charge of £7,500. The surcharge will be collected alongside the existing Council Tax due for the property.
While targeted at high-value property, developers warn it may filter down if lenders become more cautious with residential schemes more broadly.
“High-end schemes often underpin wider development portfolios. If confidence dips at the top, it can have a knock-on effect through the entire housing supply chain, so we will be watching closely how this plays out.”
40% First-Year Allowance for plant & machinery (from 2026)
Construction firms will be able to claim a 40% first-year allowance on qualifying plant and machinery. For construction firms with equipment needs, this improves cashflow and supports investment in fleet upgrades and site capability.
“This incentive will help firms invest and scale. But companies need to model the impact of the lower long-term writing-down allowance too – it’s a balancing act.”
Planning reforms: Will they finally speed things up?
The Budget also reaffirmed planning-system improvements, including:
- Faster decision-making for major projects
- Extra capacity in planning departments
- Streamlined processes for nationally significant infrastructure
- A more supportive framework for development around transport hubs
“The planning commitments look strong on paper but we have heard similar promises before. I hope that this is not just lip service and that we see real action to speed up planning.”
Landfill tax reforms to reduce costs and support new housing
The Budget also introduced reforms to the Landfill Tax aimed at reducing disposal costs for developers and accelerating the delivery of new housing. The changes are designed to make brownfield development more financially viable by lowering the cost of removing contaminated or unusable material — a long-standing barrier for smaller builders and regional developers in particular.
“Landfill costs have been a hidden drag on housing delivery for years, especially on brownfield sites where remediation is complex and expensive. Any reduction here directly improves viability and helps smaller firms bring forward sites that would otherwise remain untouched.”
Electric vehicle tax changes
The Autumn Budget also saw the introduction of a new electric vehicle road tax from April 2028, charging 3p per mile for EVs and 1.5p per mile for plug-in hybrids.
While this adds a new operating cost for construction firms running electric vans or site vehicles, the Budget also extended key incentives — including 100% first-year allowances for zero-emission vehicles and ongoing support for installing EV chargepoints.
“For construction firms already invested in EV fleets, these measures mean that long-term running costs will rise and should be factored into fleet planning. High-mileage firms should revisit their cost models so there are no surprises when the new charges arrive in 2028.”
Other general measures impacting construction firms
- Corporation tax held at 25%, providing short-term certainty.
- Stamp duty holiday for UK-listed firms for three years.
- National Minimum Wage and National Living wage set to increase from April 2026.
- Tax on Savings and Property income, will see a 2% tax increase on savings and property income from April 2027, taking the basic rate band to 22%, higher rate to 42% and additional rate to 47%.
- Tax on dividends, there will be a dividend tax increase of 2% from April 2026, taking the basic rate to 10.75% and the higher rate to 35.75%. The £500 dividend allowance stays in place.
- A £2,000 cap on salary-sacrifice pension contributions.
“The increased tax on dividends and tighter rules around salary-sacrifice arrangements will narrow the remuneration options available to many owner-directors, potentially reducing take-home pay or increasing overall tax exposure. At the same time, higher taxation of property income risks pushing more buy-to-let and small-scale property investors out of the market”.
Outlook: Positive direction, but delivery is key
This Budget gives construction firms reasons to feel cautiously optimistic — especially around skills, investment incentives, and infrastructure backing. However, pressures remain around labour costs, planning bottlenecks and the potential cooling effect of the mansion tax.
“There’s plenty here that can help the industry grow. But the benefits depend entirely on delivery — getting planners in post, getting infrastructure moving, and converting policy into real-world projects.”
Specialising in the construction sector, David is an advisor to large joint venture projects and residential / commercial developers.
