How construction companies can save money on tax

Apr 26, 2023

We all like to save money where we can, don’t we? The joy of whittling down your tax bill can work wonders for the mind (and the wallet).

Well, your construction company can also feel the thrill.

You can take a few steps to ensure you don’t pay a penny more than you need to. What are those steps, you ask? Well, why don’t we tell you?


Throughout the year, you probably end up with a stack of receipts for things you need on your day-to-day. Thankfully, you can claim back some of these costs, as long as the expense is ‘wholly and exclusively’ for business purposes.

We hate to be the ones to tell you that, sadly, this won’t include your morning coffee and bacon sarnie (sorry everyone!).

But anything you buy for your office — pens, paper printer ink and the like —will all be claimable on your corporation tax return. You can even claim back on tools and uniforms! These small expenses can add up, so you could be surprised at how much they cut down your liabilities.

Just make sure you keep a record of your costs. You can’t claim for something without proof of purchase. You wouldn’t try and return a TV without a receipt, would you?

Capital allowances

In a similar way to expenses, spending your money can actually save you money.

Chances are you invest in new machinery to help out with your construction work. Well, if you invest in eligible ‘plant and machinery’ equipment, you can make use of the full expensing scheme.

As per the Government’s rules, plant and machinery includes:

  • items that you keep to use in your business, including cars
  • costs of demolishing plant and machinery
  • ‘integral features’ of a building
  • some fixtures, including fitted kitchens or bathroom suites
  • alterations to a building to install plant and machinery (this does not include repairs).

If you spend money on these things, you may be able to claim back 100% of the cost within the first year. This will reduce your corporation tax bill, just like an expense would.

Research and development

Research and development (R&D) can be tricky for the construction industry. Usually, R&D tax credits apply to more tech-focused companies — but you can also take advantage of this tax-saving scheme.

If you’re going up against a tricky project and have to find new ways to get the job done, you could be discovering a breakthrough in your field, which, in turn, would qualify for R&D relief. The same applies if you have to create new materials.

Pay your bills early

By paying your corporation tax bill early, HMRC may actually give you some cash back.

Okay, so they won’t put money directly into your bank, as great as that would be, but you’ll receive an ‘interest credit’, which will lower your corporation tax liability for that year. Okay, so it won’t be much, as the credit rate is 0.5%, but something’s better than nothing, surely?

Knock down the numbers

We all have bills we have to pay. Not to sound ominous, but there’s no escape. That said, your construction company doesn’t have to just sit there and pay a high corporation tax bill. These are just a few things you can do to lower the cost, but you can always do more — especially with our help.

We can take a deep dive into your company’s income and costs to find ways to lower that bill. Get in touch to discuss your corporation tax liability.

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