The latest research by tax specialists, RIFT Tax Refunds, reveals that while 2023 is forecast to see an increase in the number of businesses working within the construction contractor sector, the total market size based on revenue is expected to see a -1.3% year on year decline.
RIFT Tax Refunds analysed the market size of the sector based on revenue, as well as the number of operational businesses, to see how the construction contractor industry is faring following a problematic pandemic period.
Number of businesses
The good news is that the sector has gone from strength to strength where the number of operational businesses is concerned.
In 2022, the number of construction contracting businesses across the UK sat at 93,590, having increased by 1.6% year on year and 9% versus the pre-pandemic total seen in 2019.
In fact, the research by RIFT Tax Refunds shows that this number has been on the increase every year since 2013 and is expected to climb by a further 1% in 2023, to a total of 94,545.
Declining market size
It’s more of a mixed picture when analysing the total market size of the sector based on revenue.
The sector had also gone from strength to strength in this respect, climbing every year between 2013 and 2020, when it peaked at £177.4bn – an increase of 53% versus 2013.
However, the market size of the sector then contracted by -18% in a single year falling to £145.9bn in 2021, as the complications of the pandemic hit home.
The good news is that 2022 saw a partial return to form, with a 19% increase bringing the overall market size of the construction contractor industry back to £173.8bn – albeit still -2% below the sector’s pre-pandemic peak.
But with the economic landscape remaining an uncertain one, the data from RIFT Tax Refunds suggest that 2023 could see a marginal 1.3% reduction in total market size, dropping to £171.6bn this year.
Bradley Post, MD of RIFT Tax Refunds, said, “Construction contractors provide the backbone for the UK construction industry and so it’s hardly surprising that the number of businesses in operation has climbed over the last decade. However, while this is positive in itself, total revenues generated have been less consistent due to the fact that the sector has been susceptible to the wider impact of the pandemic and, more recently, a struggling economy.
So it’s heartening to see that today the industry has managed to make a significant recovery following the sharp decline seen in 2021 due to Covid.
However, while the sector looks in fairly good shape, it’s yet to return to its pre-pandemic best and, in fact, we expect total revenues to contract slightly this year.
For those contractors working within the sector, this could mean a reduction in earning opportunities and so making every penny count is essential as they also battle the cost of living crisis.
The good news is that construction contractors are one of the most likely to be owed a tax refund by HMRC due to expenses incurred due to travel, uniforms and more. Our data shows that the average refund owed is just over £2,000, having increased by 6.3% in the last year alone.”
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