Institute reacts to publication of Chancellor’s ‘mini-budget’
23 September 2022 – Maintaining the 19 percent corporate tax rate and leveraging the tax system to deliver much needed supports will be a vital lifeline for companies in Northern Ireland in the face of inflation and increased energy costs according to Chartered Accountants Ireland. The Institute, which represents over 5,200 members working in businesses and practices across Northern Ireland made these remarks as the Government announced its ‘mini-budget’ in Westminster this morning.
As we saw during the COVID-19 pandemic, the government this morning outlined plans to deliver supports through the tax system with the aim of protecting jobs and supporting businesses in the months ahead.
Commenting, Chair of the Ulster Society of Chartered Accountants, Emma Murray said,
“Measures announced today to support businesses will come as a relief for businesses in Northern Ireland that are struggling with the impact of inflation in the cost-of-living crisis. Many of the tax changes announced will be permanent, providing businesses with certainty and stability.”
Corporation tax unchanged
As announced by Chancellor Kwasi Kwarteng today, the already legislated for increase in the corporate tax rate from 19 percent to 25 percent which was due to happen across the UK in April 2023, will not now proceed. Chartered Accountants Ireland noted however the still significant disparity between the corporate tax rate in Northern Ireland and that of the Republic of Ireland.
Murray continued
“Maintaining the corporate tax rate at 19 percent reduces the risk that some companies will relocate or establish new business operations outside of Northern Ireland. The rate is still much higher than the 12.5 percent rate in operation on the other side of the border”.
“A competitive rate of corporation tax, combined with the benefits of having access to both the UK and the EU’s single market for goods, puts Northern Ireland in a strong position to attract FDI, particularly in the manufacturing and distribution sectors, drive investment and expansion by local companies, and create more high-value jobs.”
Northern Irish Protocol Bill
Uniquely within the UK, a key economic factor for Northern Ireland is the Northern Irish Protocol. The Institute had hoped that the Chancellor would have used the opportunity in today’s announcements to provide much-needed clarity on the new Cabinet’s approach to the Protocol which affects so many businesses in Northern Ireland.
Murray concluded
"Since 2021, the Protocol on Ireland / Northern Ireland has allowed businesses in the region to continue to sell and buy unhindered from the EU. There was no clarity today on the new Cabinet’s approach to the Protocol. As the Northern Ireland Protocol Bill continues its passage through the House of Lords, businesses cannot be certain that current trading arrangements will continue. In a time of crisis like this, certainty is crucial.”
Other supports for businesses and individuals announced in today’s package of measures include;
- The 45 percent higher rate of income tax is to be abolished with one single high income tax rate of 40 percent.
- A reduction in the basic rate of income tax to 19 percent in April 2023.
- An increase in the stamp duty threshold on a property’s value such that no stamp duty will be liable on the first £250,000.
- The Stamp duty threshold for first time buyers will be increased from £300,000 to £425,000. The value of the property on which first-time buyers can claim relief is also to increase from £500,000 to £625,000.
A reversal of the April 2022 increase of 1.25 percent to National Insurance rates for employers, employees and the self-employed from 6 November and of the increase in the rates of income tax on dividends from 6 April 2023.
ENDS
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