Ahead of the UK’s general election on Thursday 4 July, we take a look at the tax policies of the two largest parties in Northern Ireland.  The DUP’s tax policies and promises  The Democratic Unionist Party (DUP) published its full manifesto last week. The party continues to argue that further work is needed on the Windsor Framework and “we will continue to argue the case for the full primacy of the United Kingdom internal market, and we will continue to reject the undermining of its integrity………..In October, as part of the NI Assembly vote on the current arrangements, we will not hesitate to vote against their continued application and, drawing upon the new mechanisms at our disposal, we will continue our quest through the inbuilt review.”  A lower rate of corporation tax for Northern Ireland also featured, something which the Institute has been campaigning on for many years. The Institute is currently developing a briefing paper on the benefits, challenges, and potential mitigations to any challenges of a lower rate of corporation tax for Northern Ireland which it plans to use as a mechanism to drive this issue forward.   The DUP’s analysis of a lower rate of corporation tax for Northern Ireland features on page 29 of their manifesto and reads as follows:  “Lowering the rate of corporation tax in Northern Ireland has been a longstanding DUP policy. This would boost Northern Ireland as an attractive investment opportunity, building on the strength, skill and ingenuity of our workforce. The minimum effective 15% rate in the Irish Republic places firms in Northern Ireland at a competitive disadvantage and we want to see this addressed. We continue to advocate for a reduction in corporate tax across the United Kingdom and DUP MPs opposed the increase in the main UK corporation tax rate from 19% to 25% in 2023.   The DUP believes there are a number of fundamental issues that require resolution with the Treasury before the powers to vary corporation tax rates - which are already provided for in law - can be enacted. We are clear that progress must be based on solid foundations. That means ensuring a process of implementation that protects spending on public services in the short to medium-term.”  DUP MPs will also campaign to:   Oppose the freeze on the personal tax allowance and higher rate income tax threshold  Seek further reductions in national insurance  Support an increase in the starting age for employee national insurance  Encourage the government to explore the merits of moving to single tax on all income, replacing income tax and national insurance  Freeze vehicle excise duty  Abolish VAT on domestic electricity bills  Maintain the freeze on fuel duty  Oppose any increase in insurance premium tax   Increase the tax-free childcare allowance from 20 percent to 35 percent  Remove the cap on tax free childcare above £2,000  Scrap VAT on school uniforms  Support the triple lock on state pensions   Support the personal allowance for pensioners always being above the amount of the state pension  Increase the VAT registration threshold for SMEs to £100,000 and then uprate it in line with inflation  Drive up the number of SMEs benefiting from tax reliefs  Ensure the national insurance liability for small businesses is fair: the Employment Allowance should be uprated in line with increases to the national living wage  Promote greater awareness of capital allowances and R&D tax reliefs among local businesses  Explore the potential introduction of an online sales tax targeting online corporates and marketplaces  Support robust efforts to crack down on global tax evading corporations  Aim for the VAT system to be better utilised to incentivise investments that promote improved productivity through low-carbon and green technologies  Continue to campaign for a reduction in VAT for hospitality across the UK, and   Expand UK research & development tax relief for small and medium sized enterprises to include capital expenditure.  In its 2022 Assembly Election manifesto, the DUP also argued that the necessary capacity did not exist for Northern Ireland to devolve additional fiscal powers. That remains its position at this time.   Sinn Fein’s tax policies  Sinn Fein published its full manifesto in mid-June, a 10 page document which did not contain any detail on tax pledges. However publicly, the party has taken a slightly different position to the DUP on the devolution of more fiscal powers arguing that although there are "important considerations" about the political and administrative capacity for Stormont to take on new responsibilities, the experiences of Scotland and Wales demonstrate that this capacity can be developed over time which "it is not a reason in itself to not consider devolution". 

Ahead of next month’s general election, the main parties in the UK have now published their party manifestos. Links to each of these are set out below. We also take a closer look at the tax policies of the Conservative and Labour parties as the two parties likely to have the most seats in Westminster after the general election on 4 July.  Tax policies – the Conservative Party  The Conservatives have pledged the following:  There will be no increase in the 25 percent main rate of corporation tax;  The rate of employee National Insurance Contributions (“NICs”) will be reduced by a further 2 percent to 6 percent;  Class 4 NICs for the self-employed, currently 6 percent, will be abolished and there is a long-term plan to end NICs altogether;  Income Tax and VAT will not rise;   There will be no increase in the rate(s) of Capital Gains Tax (“CGT”);  The manifesto is silent on Inheritance Tax; and   Child benefit will be assessed at the household level with no high income child benefit charge for couples earning up to £120,000; this would be a doubling of the current £60,000 threshold.  Tax policies – the Labour Party  The Labour Party has pledged the following:  Corporation tax will be capped at the current main rate of 25 percent for the duration of parliament (five years);  There will be no increases in income tax, NICs and VAT. However, the same promise is not made for CGT and pensions tax relief;  There are a range of tax increases aimed at wealthier voters including the closure of what is referred to as “non-dom tax loopholes” and VAT will be applied to private school fees;  A business taxation roadmap will be published;   There are “plans to modernise HMRC and change the law to tackle tax avoidance. We will increase registration and reporting requirements, strengthen HMRC’s powers, invest in new technology and build capacity within HMRC. This, combined with a renewed focus on tax avoidance by large businesses and the wealthy, will begin to close the tax gap and ensure everyone pays their fair share”; and  There is a commitment to only one major fiscal event every year.  Party manifestos are available at the following links:  The Conservative and Unionist Party manifesto;  The Labour Party manifesto;  The Liberal Democrats manifesto; and,  The Green Party manifesto.  The Scottish National Party manifesto has not yet been published. 

The Institute, under the auspices of the CCAB-I, has published its Pre-Budget 2025 Submission – Supporting and Sustaining our SME Sector. In this year’s submission, we focus on the constraints experienced by SMEs due to rising labour costs. We also highlight the deficits in housing supply and childcare places which, in addition to high personal tax rates, are making it increasingly difficult for people to live and work affordably in Ireland. We have identified the following four areas for budgetary focus: Support SMEs by exempting minimum wage workers from employers’ PRSI and simplifying tax legislation Increase the number of childcare places available and offer working parents a €1,000 tax credit to return to the workforce Introduce a 30 percent intermediate rate of income tax to retain and attract workers and help people live affordably Continue to stimulate and support the completion of new houses. The Irish Times also exclusively covered the launch of this year’s submission and you can read their story in full here.

A critical marker of Ireland’s future economic success will be supporting our SME sector by reducing the cost and complexity of doing business. This is according to the Consultative Committee of Accountancy Bodies- Ireland (CCAB-I), the umbrella group which represents some 40,000 professional accountants, as it published its Pre-Budget 2025 submission today. The paper entitled ‘Supporting and Sustaining our SME sector’ highlights the constraints experienced by SMEs as a result of increasing labour costs and also states that a lack of supply of housing and childcare places, in addition to high personal tax rates, are making it increasingly difficult for people to live and work affordably in Ireland.     The submission identifies four key areas for budgetary focus:   Support SMEs by exempting minimum wage workers from employers’ PRSI and simplifying tax legislation  Increase the number of childcare places available and offer working parents a €1,000 tax credit to return to the workforce Introduce a 30% intermediate rate of income tax to retain and attract workers and help people live affordably  Continue to stimulate and support the completion of new houses.  Commenting, Director of Public Affairs, Cróna Clohisey said  “The lead into Budget 2025 comes at a time of increased financial pressure for businesses operating in Ireland as well as clear deficits in infrastructure. Small businesses, which includes many family businesses, are being constrained by rising costs and, for many, labour costs now make up a considerable proportion of business expenditure. That is why we are asking the government to exempt minimum wage workers from Employers’ PRSI, this would save businesses labour costs of between 8.8 and 11.05%.”  The CCAB-I also believes that Ireland’s tax code has become increasingly complex in recent years and is calling for simplification of the tax rules to support businesses, enable them to grow and also ensure that Ireland remains competitive on an international stage.     Ms Clohisey continues  “For SMEs, the message we are receiving is that simplifying the tax code both legislatively and administratively, must be a priority. 70% of people working in the business economy in Ireland are employed by SMEs. The Government must move tax policy in a direction which supports the indigenous Irish economy by encouraging innovation and supporting entrepreneurs and reducing the cost and complexity of doing business.”  Childcare  In terms of childcare, the submission includes measures to improve the supply of childcare places for pre-school children. To address the impact of working parents leaving the workforce following the birth of their children on the labour supply, the CCAB-I is calling for the introduction of a €1,000 tax credit for working parents to encourage them to return to the workforce.  Ms Clohisey continues  “We know from research among our members that some working parents are unable to participate fully in the economy due to difficulties in obtaining and affording a place in a childcare setting. As a result, almost half of those surveyed have reduced their working hours to meet childcare responsibilities. We are asking that the government plans for adequate capacity in the sector by analysing local needs and ensuring adequate funding for the sector. For parents, the cost of childcare or lack of availability should not act as a disincentive to return to work. We are proposing as a starting point a €1,000 annual tax credit for working parents who return to or remain in the workforce until the child reaches primary school going age." Reforming the income tax system Ireland’s 40% tax rate is high in comparison to other competitor countries and the CCAB-I believes that introducing a third rate of income tax of 30% would make the system more equitable. It would also enhance Ireland’s attractiveness as a place to work, particularly among younger workers.   Ms Clohisey continues “Workers in Ireland pay income tax at a rate of 40% once they earn €42,000. This entry point is below the average wage and is significantly lower than most countries across the UK and Europe where incidentally having more than two tax rates is extremely common.   “Speaking on behalf of a mobile profession where most are in the early stages of their careers and are planning their futures, introducing an intermediate 30% rate would make the system more attractive and more equitable, lessening the tax burden on workers and putting more money in their pockets. The government needs to take immediate action to address the inequities that clearly exist within the system.”  Housing  In terms of housing, the submission also proposes: Extending the Help-to-Buy Scheme by two years to 31 December 2027 Abolish vacant homes tax Increase the rent-a-room relief from €14,000 to €20,000 and removing the cliff-edge Abolishing the non-resident landlord withholding tax system. ENDS  Issued by Chartered Accountants Ireland on behalf of the Consultative Committee of Accountancy Bodies – Ireland (CCAB-I). Read the submission in full here.  

Balancing the recent news that the UK tipped into recession at the end of 2023 with calls from politicians in his own party to reduce the tax burden in what is most likely an election year, Jeremy Hunt delivered the UK’s Spring Budget 2024 today. According to the Chancellor, the main announcements centred around “more investment, more jobs, and lower taxes”.   The VAT registration threshold will increase to £90,000 from April 2024, the first increase since 2017.  Full expensing which provides 100 percent tax relief for investments in new plant and machinery by companies will be extended to leased assets, when affordable. And the higher 28 percent rate of Capital Gains Tax on residential property disposals will be reduced to 24 percent from 6 April 2024. According to the Chancellor’s speech, the Northern Ireland Executive will receive an additional £100 million under the Barnett Consequential (which compensates devolved administrations with funding where Budget measures do not apply UK-wide) and from April 2025 both the regime for non-UK domiciled individuals and furnished holiday lets will be abolished with a new residence-based regime to be introduced for non-UK domiciles. However, the big ticket announcement was the 2 percent reductions in the rates of National Insurance Contributions for employees and the self-employed, both of which will take effect from 6 April 2024. Members will also be interested to hear that HMRC’s long planned consultation on “Raising standards in the tax advice market” has been launched and essentially examines options to strengthen the tax agent regulatory framework in the tax advice market, and on requiring tax advisers to register with HMRC if they wish to interact with HMRC on a client’s behalf. The Institute will be responding to this consultation and engaging with members on this important issue. The analysis in this and subsequent stories is based on the Spring Budget 2024 publications of HMRC and HM Treasury and specifically the main red book publication. Monday’s edition of Chartered Accountants Tax News will feature the tax announcements in more detail. The Spring Finance Bill 2024 is expected to be published next week, in the meantime supporting documents are available, as is the Spring Budget 2024 overview of the tax legislation and rates. You can also read the Institute’s reaction to today’s Budget.

From next year, individual taxpayers will see more in their pockets as a result of the planned reductions in national insurance contributions However, today’s Autumn Statement featured little in the way of immediate tax cuts and supports for small and medium sized businesses As a region, Northern Ireland continues to be left behind on key issues and supports   22 November 2023 – Today’s Autumn Statement was a missed opportunity to provide struggling businesses with tax incentives and supports which would allow them to grow and thrive, according to Chartered Accountants Ireland. The Institute, which represents almost 5,000 members in Northern Ireland, more than two thirds of whom work in business, made these remarks as Chancellor Jeremy Hunt delivered his Autumn Statement in Westminster earlier today. Commenting, Janette Burns, Chair of the Northern Ireland Tax Committee of Chartered Accountants Ireland said:  “Today’s Autumn Statement was clearly delivered with one eye on a general election next year. More cash in people’s pockets after the cuts in national insurance take effect from January and April next year are positive and will also help reduce the cost of employment. But today the Chancellor did not deliver the same level of tax supports that we know many small businesses urgently need and want as they continue to grapple with high inflation. Confirmation that companies will be able to fully expense the cost of capital investment in new plant and machinery against profits permanently, and beyond the original end date of 31 March 2026, is a bold move and will provide the certainty needed for major investment plans, which in turn will bolster the economy and productivity. But this is only of real benefit to larger companies".  What’s needed is targeted incentives and supports for small and medium businesses. For example, Northern Ireland’s hospitality sector could have benefited from a reduction in the 20% VAT rate. Just a few miles down the road in Ireland, the rate is 13.5% and many other European countries have much lower rates than the UK. When coupled with high food prices, this makes it very difficult for Northern Ireland hospitality businesses to compete.   Paul Millar, Chairman of Chartered Accountants Ulster Society added:  “The relief available to SME companies which incentivises R&D activity was reduced by almost 34% from April this year. We urge the Chancellor not to further reduce relief this for genuine innovation activity as part of the plans announced today to merge the two current schemes. This is just another example of where the Chancellor could have taken the opportunity to set out a detailed roadmap for this relief which would have provided certainty to those investing in R&D.  In recent years Northern Ireland businesses have shown how adaptive and resilient they are. This was highlighted at the recent investment conference which showcased the brightest and the best we have to offer. But more needs to be done. The Government needs to recognise and reward this by establishing a pipeline of tax supports and incentives to enable businesses to truly grasp the entrepreneurial mindset which we know would help Northern Ireland crystallise all the opportunities that are there for the taking. Let us not forget that Northern Ireland also has legislation potentially within its grasp to reduce its corporation tax rate to match that in the Republic. Innovation, creativity, and a more entrepreneurial approach will benefit all here by driving economic growth, and job creation.  The time is ripe to help Northern Ireland level up. But this cannot begin until we have our politicians back in Government. Once again, we urge them to look at the bigger picture. We echo the recent sentiment that political decisions should not affect operational decisions. But this equally applies to the business of doing what is needed to help grow our economy, and ultimately benefit all of our citizens.” Other information:- The main tax announcements by the Chancellor today were as follows:- National insurance contributions for the self-employed will reduce by 1% from 6 April 2024; Employee national insurance contributions will reduce by 2% to 10% from 6 January 2024; The 100% deduction available to companies for investments in new plant and machinery is being made permanent and will not end on 31 March 2026; and The UK’s SME and large company R&D tax relief regimes are being merged into one scheme which will commence from 1 April 2024.

A new Tax Advisor Liaison Committee (“TALC”) subgroup is to be established by Revenue in the coming weeks which will focus on identifying any opportunities “to simplify and modernise the administration of business supports”, an area the Institute has been lobbying for for many years. In the area of compliance, the Budget 2024 Tax Policy Changes publication confirms that Revenue will conduct a range of targeted compliance management activities in 2024. The Terms of Reference of the new TALC subgroup (which is a meeting of Revenue and representative bodies including the Institute under the auspices of CCAB-I) will be agreed at TALC with a report on the recommendations expected to be delivered during the course of 2024. In respect of the targeted compliance activities in 2024, it is expected that additional Exchequer receipts will arise from increased taxpayer compliance in the areas of eCommerce, payroll and expenses reporting and the cash/shadow economy. In addition, Revenue estimates that €180 million in refunds could potentially be due to taxpayers for 2022 alone. As a result, the Minister announced that an extensive public information campaign will be launched shortly by Revenue in order to raise awareness of the range of tax credits and reliefs available to PAYE taxpayers, in order to ensure people can avail of their full entitlements and receive any refunds that are due.  

Recognising the continuing vital importance of farming across Ireland, a number of agricultural reliefs which were due to cease at the end of 2023 have been extended, including the scheme for accelerated capital allowances on farm safety equipment. The Minister also increased the maximum aggregate lifetime limit of a number of farm-related reliefs to the maximum allowable under the new EU Agricultural Block Exemption Regulation. The VAT flat rate for unregistered farmers is also being reduced. Consanguinity relief (stamp duty) This relief is being extended for a further five years to 31 December 2028. The relief reduces the rate of stamp duty applicable to intra-familial transfers of farmland from 7.5 percent to 1 percent. The Government also published “Review of Consanguinity Relief (2023)” which makes a number of recommendations in relation to the relief, including the five year extension which is to be implemented. Accelerated capital allowances on farm safety equipment This scheme, which provides for accelerated capital allowances of 50 percent per annum in respect of  eligible equipment, and which was due to end on 31 December 2023, is being extended for three years to 31 December 2026. The expenditure must be certified by the Minister for Agriculture, Food and the Marine. Once certified, the expenditure can be written off at a rate of 50 percent per annum over two years rather than at the normal rate of 12.5 percent over eight years. Reliefs for Young Trained Farmers and Succession Farm Partnerships Stock relief for young, trained farmers, relief for succession farm partnerships and young trained farmers stamp duty relief are all being amended to increase the aggregate lifetime amount of relief available to a person under these reliefs from €70,000 to €100,000 from 1 January 2024. Stock Relief (Registered Farm Partnerships) Stock relief for registered farm partnerships is being amended to increase the threshold from €15,000 to €20,000 in the case of qualifying periods commencing on or after 1 January 2024. Flat-rate VAT compensation percentage The Minister announced that the flat-rate compensation percentage of VAT for farmers will be reduced to 4.8 percent (a reduction of 0.2 percent) from 1 January 2024. This scheme compensates unregistered farmers on an overall basis for VAT incurred on their farming inputs. According to the Budget publications, the decrease is based on macro-economic data received for the period 2021-2023.

The main measures announced were the now usual annual Budgetary increases in excise duty for tobacco products, and an extension to the current excise reductions for fuel. There were no increases in alcohol duty. Fuel excise The Minister deferred the final tranche of the various fuel duty excise increases which will now take place in two equal instalments, with the first taking place on 1 April 2024. Therefore the temporary excise rate reductions which apply to diesel, petrol and marked gas oil, and which were due to expire on 31 October 2023, are being extended. 4 cents, 3 cents and 1.7 cents will be added to petrol, diesel and marked gas oil respectively on both 1 April 2024 and 1 August 2024. Tobacco excise Excise duty on tobacco products is being increased by 75 cents, inclusive of VAT, on a pack of 20 cigarettes in the most popular price category. Pro rata increases will apply to other tobacco products. According to the Budget 2024 Financial Resolutions, this change will take effect from midnight tonight. E-cigarettes and vaping   In the context of public health interests, delays to the revision of the EU’s Tobacco Products Tax Directive and the Government’s commitment to tax e-cigarettes and vaping products, the Minister is proposing to introduce a domestic tax on these products in next year’s Budget. According to the Minister, this will involve considerable preparatory work by both the Department for Finance and the Revenue Commissioners in drafting this legislation.