The UK construction industry is entering a transformative phase. As inflation persists, labour becomes scarcer, and compliance obligations grow more complex, businesses across the construction supply chain must evolve - or risk being left behind.
Here are three construction trends in 2025 that are redefining how firms operate, hire, and grow.
1. Labour Shortages and the Shrinking Skilled Workforce
The construction industry is facing a workforce crisis. As of early 2025, the UK recorded 38,000 job vacancies in construction, (Reuters) with the industry projected to require over 250,000 additional workers by 2028 to meet demand from infrastructure expansion and housing goals.
But here's the challenge: the pipeline is drying up.
Key contributing factors:
- An ageing workforce: 58.3% of workers are aged 36–65. Retirement is looming.
- Fewer young entrants: Just 7.8% of construction workers are aged 18–25.
- Declining apprenticeship uptake: New starts fell by 1.4% in 2023–2024 alone (Builders Merchants News)
- Brexit restrictions: Reduced access to EU labour continues to pinch availability.
- Negative image: Perceived as physically demanding and low-prestige, construction often fails to attract younger generations.
This imbalance poses a major risk to project delivery and long-term sustainability. Many firms are responding with higher wages and increased incentives, but that's only part of the solution.
Businesses must:
- Promote construction careers in schools and colleges
- Invest in modern apprenticeships and upskilling programmes
- Improve diversity, flexibility, and workplace culture to attract younger talent
2. Compliance Pressure: Preparing for the 2026 PAYE and CIS Reforms
A regulatory shift is coming in April 2026—and it's one of the most impactful the sector has faced in decades.
From April 2026, HMRC will shift tax liability for PAYE from umbrella companies to end hirers or recruitment agencies. That means if you're involved in any part of the labour supply chain, you could be held liable for unpaid tax—even if a third party was processing payroll.
Even more significantly, Construction Industry Scheme (CIS) arrangements will come under increased scrutiny. If a subcontractor is working under supervision, direction, or control (SDC), they may be reclassified as a disguised employee, leaving your business exposed.
What firms must do now:
- Audit your supply chain: Use HMRC’s “Check, Act, Review” due diligence principles.
- Review CIS arrangements: Document SDC status assessments clearly.
- Re-assess labour models: Offer both PAYE and CIS options where appropriate.
- Partner with compliant providers: Non-compliance could lead to financial penalties and reputational damage. Learn 5 warning signs of Mini Umbrella Companies here.
3. Digital Transformation and Workforce Technology Adoption
Compared to sectors like logistics or finance, construction has historically lagged in digital maturity. But that’s changing fast in 2025.
Driving forces:
- Labour shortages are pushing firms to streamline onboarding and worker management.
- Compliance complexity is increasing the need for automated payroll and verification systems.
- Modern workers expect digital tools, not paper forms and manual sign-in sheets.
Leading construction firms are adopting:
- Self-serve digital onboarding platforms to accelerate workforce mobilisation.
- Integrated compliance systems to ensure real-time PAYE, CIS, and Right to Work validation.
- Smart labour planning tools for project scheduling and cost forecasting.
On-site, innovations like robotic bricklaying, modular construction, and AI-assisted design are beginning to transform how physical builds are delivered.
While adoption is still uneven, especially among SMEs, the firms embracing digital now are gaining:
- Faster time-to-site for workers
- Reduced admin overhead
- Greater appeal to younger, tech-savvy workers
In 2025, construction is being reshaped by a convergence of demographic, regulatory, and technological pressures. Firms that fail to adapt risk project delays, rising costs, and talent attrition. But those that respond proactively can gain a competitive edge.
Our latest report offers a comprehensive analysis of the challenges and opportunities facing the construction sector today. Whether you're a recruiter or end hirer, understanding the trends outlined in this report is critical to your strategic planning for 2025 and beyond.