The Budget Is Coming — and It's Contractors Who'll Feel It First
Key Takeaways
- 1.Material prices, NI rises, minimum wage increases, and clients shelving projects — a harsh year for contractors
- 2.Construction employment down 15% since pre-COVID — that's 350,000 jobs gone in five years
- 3.Income tax thresholds may freeze, pushing more contractors into higher-rate tax brackets
- 4.Dividend rates and allowances likely to change, impacting Ltd company owners
- 5.VAT threshold might drop from £90k, forcing more contractors into VAT registration
- 6.Making Tax Digital starts April — quarterly reporting for anyone earning £50k+
- 7.HMRC expected to give clearer rules on IR35, reducing grey areas
- 8.Capital gains tax and Business Asset Disposal Relief changes if selling your business
I sat down with accountant and construction-sector specialist Hayley Gedney to talk through what UK contractors are really up against right now — and what to expect from the upcoming budget.
"It's been a really harsh year… material prices, NI rises, minimum wage, and clients shelving projects."
— Hayley Gedney
The squeeze is real — and it's hitting every part of the supply chain. Construction employment is down 15% since pre-COVID. That's 350,000 jobs gone in five years. Decision-makers are cautious for a reason.
What's Coming in the Budget?
Income Tax Thresholds May Freeze
Meaning more contractors pushed into higher-rate tax. As inflation continues, frozen thresholds effectively become tax increases.
Dividend Rates and Allowances Likely to Change
If you run a Ltd company and pay yourself through dividends, the budget might hit your pocket directly. Understanding these changes now is critical for financial planning.
VAT Threshold Might Drop from £90k
More contractors forced into VAT registration — more admin, more cost, and more complexity in your day-to-day operations.
Making Tax Digital Starts April
Quarterly reporting becomes a reality for anyone earning £50k+. As Hayley put it: "For some contractors, this is a massive change in their routine."
IR35 Clarity Expected
HMRC is expected to give clearer rules on IR35. Good news — fewer grey areas for the distinction between subcontractors vs employees.
Selling Your Business?
Thinking of selling your business in the next 2–5 years? Keep an eye on capital gains tax and Business Asset Disposal Relief. Plan early or pay more.
💥 Hayley's Biggest Message: "Know Your Numbers."
Break-even. Cashflow. Tax liabilities. If you can't see 6 months ahead, you're driving blind. This isn't just about surviving the budget — it's about building a sustainable contracting business.
If you're a contractor in the UK — this budget matters. Watch the full fireside chat above. It might just save you a lot of money, time, and pain in 2025.
Featured Guest
Hayley Gedney
Accountant & Construction Sector Specialist
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