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.

Looking beyond headline corporation tax receipts to the health of the corporate sector is key Budget 2024 is a first step towards meaningful support for entrepreneurs Use of tax policy as a lever to encourage landlords to remain in rental market will work for society and the economy   High time for childcare to be recognised as part of critical infrastructure     10 October 2023 – Reacting to today’s Budget speeches, Chartered Accountants Ireland has highlighted the importance of supporting enterprise across the country. The Institute represents over 32,700 members, two-thirds of whom work in business.   Supporting enterprise   Director of Public Affairs, Dr Brian Keegan commented  “A healthy corporate sector is critical to Ireland’s economic growth. Without it, the state simply doesn’t have the tax receipts to effect change across so many areas of the economy and society.    “It’s positive to see the focus switching away from the headline corporation tax receipts and the enterprise sector being singled out and supported. These businesses create significant local employment and deserve the support announced today of a €250 million fund to help meet the increased cost of doing business in 2024.   “We hope that the scheme is introduced in a timely manner as businesses are already grappling with additional costs of statutory sick pay, impending pension auto-enrolment and a significant uplift in the minimum wage to €12.70.”  Supporting entrepreneurism   The Institute has also noted the uplift in the R&D credit from 25% to 30% as well as an enhanced capital gains tax relief for angel investors. It states that these measures send the signal that Ireland is open for business and wants to support entrepreneurism.  Dr Keegan continued  “The R&D tax credit has been hugely successful in encouraging research and innovation and creating employment. New capital gains tax reliefs for angel investors should result in early funding being made available to businesses when they need it most – at inception. There have been few new initiatives for the corporate sector in the past decade, and it was positive today to see recognition of the sector to Ireland’s economy.”   Tackling housing  The lack of adequate, affordable, reasonably located housing for staff is one of the biggest barriers to expansion reported by Chartered Accountants Ireland members. The Institute said that today’s tax break of €600, rising to €1,000 over three years, announced for small, private landlords if they remain in the rental market will help to boost Ireland’s housing supply. Cróna Clohisey, Tax and Public Policy Lead said  “Small landlords are an essential feature of a fully functioning residential property market, and properties owned by these landlords are more likely to be in regional, less densely populated parts of the country, providing much needed rental stock in areas that are not as attractive to institutional investors.  “Today’s announcement for landlords will help stabilise the rental market and give more certainty to tenants but also importantly make it more attractive for a small private landlord to enter the rental market. Combined with an increased rental tax credit, the measures will go some ways to helping people access housing, and it will work for society and the economy.”  Childcare as a critical infrastructure issue   Today’s announcement of an increase in the national childcare subsidy (NCS) from €1.40 to €2.14 as well as extending the NCS to certain childminders will help with the cost of childcare but will not address significant capacity constraints within the market.   Clohisey continued  “The cost of childcare is unaffordable for many working parents and today’s announcement to increase the NCS from September 2024 is welcome. However, a survey of our membership last month shows that in addition to cost, the biggest challenge working parents face is a lack of available childcare places.      “While a commitment was made today to address supply issues through core funding, we are asking government to recognise that childcare provision is part of the critical infrastructure necessary for a functioning economy. The crisis needs to be addressed with a long-term strategy with children at the forefront, that adequately funds the sector, increases capacity, and supports working parents.”    ENDS      

The Minister for Finance, Michael McGrath TD and the Minister for Public Expenditure and Reform, Paschal Donohoe TD, will announce Budget 2024 on Tuesday 10 October 2023. We will issue our Budget 2024 newsletter tomorrow evening covering all the main points. You can keep up-to-date with the announcements by visiting the Institute's Budget 2024 landing page.  

As reported last week, Revenue is continuing to issue notices to employers’ ROS inboxes, inviting them to register for webinars on the new Enhanced Reporting Requirements (ERR) for employers. The notice will contain a link to Eventbrite where a free ticket can be booked to attend a webinar on a suitable date and time. These webinars are scheduled to take place over the next 8 weeks. A sample event invitation can be viewed here.  The Institute has emphasised to Revenue the need for detailed and timely guidance for employers to prepare for the new reporting requirements. We will continue to liaise with Revenue and inform members via Tax News.   

In Irish news, the Institute has informed the Minister for Finance of members’ concerns with the proposed new enhanced reporting requirements and we give you an update from the recent meeting of the Tax Administration Liaison Committee Collections subcommittee. In UK news, the Autumn Statement will take place on Wednesday 22 November, and the Institute is discussing with HMRC the 31 October 2023 deadline for the end of the VAT margin scheme in respect of certain second-hand cars.  In International news, the OECD publishes the 2023 Secretary General tax report.  Ireland The Institute, under the auspices of the CCAB-I, has written to the Minister for Finance, Michael McGrath T.D., to highlight significant concerns our members have about the proposed introduction of Enhanced Reporting Requirements. Read our update from the September 2023 meeting of TALC Collections subcommittee. UK Last week the Chancellor of the Exchequer announced that the Autumn Statement will take place on Wednesday 22 November. The Institute is discussing with HMRC the 31 October 2023 deadline for the end of the VAT margin scheme in respect of certain second-hand cars. International This year’s Secretary General tax report has been published providing an update on the progress on the OECD’s Two-Pillar Solution. Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount. You can also read this week’s EU exit corner here which features updated guidance and publications and the news that the UK has agreed a deal to associate to Horizon Europe.     

Revenue has published a Tax and Duty Manual which highlights further changes to the 2022 income tax return (2022 ROS Form 11).  The changes include a workaround, advocated by CCAB-I, to enable the filing of the 2022 Form 11 where rental income is paid to non-resident landlords and there is no collection agent, or the tenant has not withheld tax from rent paid.  Other changes include pre-population of certain PSWT information, a new sub-panel to claim the rent tax credit as well as updates to the tax credits panel to reflect increased values, warning messages and some changes to the EII, SURE and SCI sub-panels. The 2022 ROS Form 11 has been available since 1 January 2023 but is updated on an ongoing basis to include additional prepopulated information from third parties.  Readers are reminded that there is no ROS offline version of the 2022 Form 11 but it can be prepared offline using the Return Preparation Facility (RPF). Further information is available in eBrief No.177/23.  Revenue’s Tax and Duty Manual – A Guide to Self-Assessment- has also been updated at paragraph 4 to reflect the available online payment options.

In Irish news, Revenue has updated its website to include information on the new enhanced reporting requirements for employers and has provided a note regarding the tax treatment of GMS income of GPs in certain circumstances. In UK news, HMRC recently published its 2022/23 annual report, and has estimated error and fraud in R&D as it publishes its approach to R&D compliance. In International news, OECD research suggests a modest recovery in tax revenues in the Asia-Pacific region post-pandemic. TaxNews will be taking a seasonal break for the next few weeks, returning 4 September 2023.  Ireland Revenue updated its website to set out information on the new enhanced reporting requirements for employers to report details of non-taxable small benefits, travel and subsistence and remote working allowances paid to employees and directors from 1 January 2024. Revenue has provided us with a note in relation to the tax treatment of GMS (General Medical Services) income of GPs in circumstances where GMS payments have been mandated to a medical practice by a GP that is an employee of, or partner in, the practice. UK HMRC has published its annual report and accounts for the year ended 31 March 2023 together with the HMRC Charter annual report 2022/23. HMRC estimates error and fraud in R&D and publishes approach to R&D compliance. International OECD research observes modest recovery in Asia-Pacific tax revenues. Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount. You can also read this week’s EU exit corner here.

Representatives from the Institute, under the auspices of the CCAB-I, met with the Minister for Finance, Michael McGrath T.D and his team earlier this week to discuss CCAB-I’s pre-Budget 2024 submission. The need to simplify the tax system and reduce the administrative burden on businesses was discussed, as were the complexities experienced by small businesses, in particular, when availing of several of the business tax reliefs. The importance of long-term investment in critical infrastructure, not least housing, in order to maintain Ireland’s position as a competitive place to do businesses and also to retain and attract talent was also highlighted.  

Revenue has issued a warning of a scam SMS (text message) purporting to come from Revenue seeking personal information from taxpayers in connection with a tax refund or seeking debit/credit card details. The Revenue Commissioners never send emails or text messages requiring customers to send personal information via email, text or pop-up windows. Further information is available here.

Last week, we posted an update on the new R&D tax credit filing requirements, including the specified return. To the extent it was not clear how the new forms will apply, it was confirmed at the recent R&D Discussion Group that the new Specified Return will need to be completed and returned via MyEnquiries along with the Form CT1 2022 where: An acceleration of the second and third instalment is claimed in accordance with section 766(4D) or 766A(4C) TCA 1997 A R&D tax credit is claimed in accordance with section 766C TCA 1997 A R&D tax credit is claimed in accordance with 766D TCA 1997. As mentioned last week, the Form CT1 2023 is expected by 10 July and will include sections reflecting the updates to the R&D tax credit.

The Minister for Finance, Michael McGrath TD, has published an analysis by his department entitled Future-proofing the Public Finances – the Next Steps. A key recommendation in the analysis is the establishment of a long-term public savings vehicle to ensure that windfall corporation tax receipts are not used to fund permanent expenditure increases or tax reductions. Secondly, such a fund could contribute to meeting budgetary pressures in the future. The report also notes that, under almost all of scenarios simulated, the drawdowns from such a long-term public savings vehicle would still not be sufficient to cover the full increase in ageing-related costs expected by 2030. Therefore further reforms to the pension system – including increases to the rate of PRSI – will be required. Commenting on the scoping paper, Minister McGrath said: “The analysis published by my department today highlights some of the vulnerabilities the public finances face from both revenue and expenditure perspectives. On the revenue side, while the headline budgetary accounts look to be in very good shape, this is largely the result of corporation tax receipts, which have increased more than five-fold in the past decade. My department estimates that around half of these receipts could be potentially transitory in nature. Looking ahead, Government is also aware of the major expenditure challenges on the horizon. Shifting demographics and adapting to the climate and digital transitions will impose large costs on the public finances. While the Irish demographic picture is currently favourable, developments in the coming decades will mean that we will be spending significantly more just to maintain the current level of service, all because of an ageing population. The paper my department published today outlines some of the options available to Government to help to mitigate against these risks to the public finances. Taking into account this analysis, it is my intention to bring forward proposals for a long-term savings vehicle which will be used to pre-fund part of the future costs of structural change. The paper also discusses different approaches to using the windfall receipts including for a new long-term savings vehicle, and using a portion to pay down debt and for additional, targeted capital investment. I was pleased to brief cabinet on this paper yesterday. Subject to government approval, setting up such a long-term savings vehicle will require primary legislation.” Further information is available on gov.ie.

The Minister for Finance, Michael McGrath TD, has welcomed European Commission approval of the enhancements to the Temporary Business Energy Support Scheme (TBESS) announced in Finance Bill 2023.The approval has been received under the State Aid Temporary Crisis and Transition Framework (TCTF). The enhancements announced in the Finance Bill (and which were called for by the Institute) include: Extending the scheme to 31 May 2023, with the option to further extend the scheme by Ministerial Order to not later than 31 July 2023, Reducing, with effect from 1 September 2022, the energy cost threshold for qualification for the scheme from a 50 percent increase in electricity or gas costs to a 30 percent increase, and Increasing, from 1 March 2023, the level of relief from 40 percent to 50 percent of eligible costs. The time limit for making claims under the scheme has also been extended. The enhancements are in addition to amendments made in February 2023 to increase the monthly limit to €15,000 per qualifying business in relation to a trade or profession, subject to an overall cap of €45,000 in cases where a business is carried on from more than one location. These changes took effect from 1 March 2023. Commenting, Minister McGrath said: “I am pleased to note that the European Commission has approved the enhancements to TBESS brought forward in Finance Bill 2023. These changes, in particular the lower entry threshold for the scheme, which is backdated to September 2022, will ensure that additional businesses can benefit from this vital support and I encourage businesses who have not already done so to register for and submit claims under the scheme.” As of 20 April, 28,035 businesses have registered for the scheme. Revenue has approved 35,613 claims to the value of €77.6 million.