The size of the construction contractor sector based on revenue will see a -1.3% year-on-year decline, according to research by tax specialists RIFT Tax Refunds.
In 2022, the number of construction contracting businesses was 93,590, having increased by 1.6% year-on-year and 9% compared with the pre-pandemic total in 2019.
This number increased every year since 2013 and is expected to climb by a further 1% in 2023, to a total of 94,545.
Based on revenue, the sector peaked in 2020 at £177.4bn, an increase of 53% compared with 2013.
The size of the market contracted by 18% to £145.9bn in 2021; however, a 19% increase in 2022 brought the overall market size of the construction contractor industry back to £173.8bn – albeit still -2% below the pre-pandemic peak.
RIFT Tax Refunds suggested that 2023 could see a marginal 1.3% reduction in total market size, dropping to £171.6bn this year.
Bradley Post, managing director 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.”
He added: “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.”
Post concluded: “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.”
