Reacting to today’s Budget, Chartered Accountants Ireland says that small businesses have borne the heaviest burden in the attempt to repair the UK’s finances and the innovative tax policies needed to drive long-term growth and sustainability are not in evidence today.
Commenting, Janette Burns, Chair of the Institute’s Northern Ireland Tax Committee noted:
“In a rush to repair the funding gap in public finances and keep pre-election promises not to raise tax on working people, the hike in employers’ national insurance contributions (NIC) as well as a rise in the minimum wage means small businesses, many of whom are already struggling, will face increased labour costs. Although some businesses will be partially protected by increased allowances, the 1.2% rise in employer NIC is unlikely to be sustainable for many.
“Increasing the rates of CGT was anticipated but the concern remains; a higher rate brings with it the risk of deterring investment and is likely to lead to reduced economic activity across many sectors which could ultimately slow the tax take.
“On the business tax side, maintaining the corporation tax rate of 25 percent gives much needed certainty to business leaders. Chartered Accountants Ireland continues to support a reduced rate of corporation tax for businesses operating in and from Northern Ireland and believe that this would raise productivity, increase incomes, and unlock the economic potential in the region.”
Gillian Sadlier, Chair of Chartered Accountants Ireland Ulster Society, said:
“The extent to which the various measures announced in today’s Budget will lead to real growth across the UK economy remains to be seen. Ultimately, businesses are the drivers of growth and what this Budget has done is increase their overheads.
“There were some smaller innovative measures that the government could have announced which would have cost relatively little. For example, we would have liked to have seen an increase in the £90,000 VAT registration threshold to reduce the administrative burden on small businesses and to enable growth. In terms of innovation, a commitment to review the rules around the research and development credit to make it best in class internationally would also have been welcomed.
“The commitment to significantly increase HMRC’s headcount is positive but there must be a definitive drive to improve customer service levels, which have deteriorated in recent years.”
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