What Construction SMEs Need to Know

May 2025 Business Update

At BR Pusser & Co, we’re committed to keeping you informed with the latest financial and industry updates that affect your business. Here are the most important changes and best practices you need to be aware of this month.

Important Accounting Updates for 2025

UK GAAP Changes Coming in 2026

If your business prepares formal accounts, watch out for upcoming accounting rule changes starting January 2026.These updates include:

• New revenue recognition rules that could affect how and when you record your income.

• Lease reporting changes that could bring more liabilities onto your balance sheet.

It’s worth checking with your accountant to prepare in advance.

Construction Industry Scheme (CIS) Expansion

From March 2025, CIS now applies to more services, including traffic management related to construction. Make sure you’re checking and deducting the right tax on payments to subcontractors.

Tax Year 2025/26 Changes

• Employer National Insurance has increased to 15%.

• Employment Allowance has been raised to £10,500 – check if you qualify.

• New late payment penalties apply after 15 days, so staying on top of deadlines is more important than ever.

• Capital Gains Tax on business sales has increased from 10% to 14%.

Tax Year 2026/27 Changes

Making Tax Digital (MTD) for Income Tax

• Effective April 2026: Self-employed individuals and landlords with annual business or property income over £50,000 will be required to comply with MTD for Income Tax. This entails:

  • Maintaining digital records.

  • Submitting quarterly updates to HMRC.

  • Filing a final annual declaration.

• Future Extensions: The threshold will lower to £30,000 from April 2027, bringing more businesses into the MTD regime.

Best Accounting Practices for Construction Businesses

1. Job Costing & Project Tracking.

   Always track costs by project to monitor profitability and spot overruns early.

2. Cash Flow Management

   Stage your invoicing with project milestones to keep cash flowing smoothly.

3. Managing Retentions & Variations

   Make sure retentions are clearly agreed in writing and variations are properly priced and approved before starting the extra work.

4. Using the Right Tools

   Software like Xero, QuickBooks, or Sage can make a big difference in managing your finances, helping you stay compliant and organised.

Need Help?

If you’d like to discuss how these changes affect your business, or get support with your accounting systems, we’re here to help.

📞 Contact Us Today