Chancellor delivers business opportunities in construction and technology sectors

It may have been a ‘non fiscal’ event, but the spring statement provided potential opportunities for businesses across multiple sectors.

While Rachel Reeves stuck to her pledge of only one fiscal event in the Autumn, there were significant announcements around funding, notably increased government capital expenditure of £2bn each year.

Kyle Newton, tax partner at BHP, said the increase will be welcomed by the construction utilities, defence and technology sectors.

He said: “The spring statement signalled significant investments in technology and defence. In a move to modernise the civil service, the chancellor announced a £3.25bn transformation fund to drive public service reform through digital technologies and AI adoption, which will present promising opportunities for tech consultancies and contractors.”

Elsewhere, Ms Reeves announced a £2.2bn boost to Britain’s defence industry, to make the UK a ‘defence industrial superpower’.

Kyle said: “Defence spending increases were particularly noteworthy. There are going to be defence contractors who will see this as good news in terms of potential revenue streams from government contracts.”

The chancellor also announced £600m to train up to 60,000 more construction workers. Kyle said the government’s commitment to the construction sector stands outs as one initiative to help lower unemployment particularly among young people.

He said: “The £600m funding is aimed at job creation in a sector where we have a skills shortage. The funding isn’t just about immediate workforce needs but addresses long-term capacity constraints in the industry. The whole idea is to try and deal with that constraint and ensure they’re training the next generation.”

With the UK government’s drive to get people, especially the young, back into work, it is, says Kyle, offering strategic incentives, particularly around utilising apprenticeship levy funding and national insurance contributions (NIC). While these incentives are not new, Kyle advises businesses to look at them to reduce costs

He said: “There are different categories of NIC where employers don’t pay for certain workers – typically young workers under 21 and under 25 for those who are on an apprenticeship. The exemption also extends to veterans who are in their first job since leaving the forces.

“These incentives are designed to make hiring more attractive and cost-effective. It’s about being smarter with recruitment and reducing your cost base when bringing in new workers.”

While the statement didn’t introduce major tax changes, it signalled increased future enforcement and Kyle warned that companies need to be vigilant to ensure they don’t fall foul of tightening regulations.

He said: “HMRC wants more power to go after advisers promoting schemes and improve way to penalise them and tax avoiders in general. HMRC is also looking to launch consultations on changing penalty regimes for tax errors and recruiting more officers.

“The message is clear – compliance is crucial. Employers need to make sure they’re doing all the right things to remain compliant. Specific areas of focus include research and development (R&D) tax claims. There will be more certainty over claims and businesses will know if the claim will go through before going through the full process as part of a move to clampdown on errors and fraud.

“Elsewhere, companies need to keep an eye on national minimum wage compliance. HMRC has been increasingly enforcing national wage regulations, adding different layers of enforcement which has led to many companies being named and shamed. However, very often these are technical breaches with no intent behind them, so businesses need to be extra vigilant.”

For companies doing battle with increasing tax burdens which come into force on 6 April, Kyle outlined several strategies for businesses to manage increased costs, particularly around national insurance.

Pension salary sacrifice, electric vehicle policies, and strategic benefits provision were highlighted as potential cost-management solutions.

Kyle said: “Rather than giving cash, it is worth looking at how, as business owners, you can provide a benefit of the same value that’s tax-exempt.

“A standout example is the tax benefits of company mobile phones. You can provide a company mobile phone tax-free, usable for personal reasons. It’s a simple way to provide value while saving money.”

Beyond immediate business implications, the spring statement has broader financial planning considerations. Inheritance tax changes, for instance, will require careful strategic thinking.

Kyle said: “If you’re looking to pass things on to your kids or family, there’s more planning needed now to avoid a big inheritance tax bill down the line.”

While the spring statement may have been a non-fiscal event there were opportunities across several sectors, however Kyle says the key for businesses is strategic thinking, compliance, and adaptability.

He said: “The main thing is focusing on the points from the autumn budget. Consider how increasing costs might impact your business and think about your own financial planning.”

Accountants and business advisers BHP our sponsors of TheBusinessDesk.com’s coverage of the Spring Statement.