The government announced that it is capping the headline rate of corporation tax at 25 percent, the lowest across the G7. It has committed to maintaining the capital allowances system, preserving the R&D tax relief, and developing a new process for increasing tax certainty in advance of major investments. In our letter to the Exchequer Secretary to the Treasury ahead of today’s Budget, we raised the importance of certainty and stability for the R&D tax relief, given the myriad changes in recent years. As such, it is welcome to see a commitment to preserving the R&D tax relief. Offshore trusts The government announced that transitional arrangements will be introduced to tackle offshore trusts which are used to shelter assets from inheritance tax (IHT). The details of how these measures will operate will be discussed in due course once those details become available. Carried interest The tax treatment of carried interest will be reformed by increasing the capital gains tax (CGT) rate on such interest to 32 percent. From April 2026, a revised regime will apply which will have bespoke rules reflecting the characteristics of the relevant reward. VAT on private schools The government has maintained its commitment to introduce VAT on education and boarding services provided by private schools. From 1 January 2025, VAT of 20 percent will apply to charges for services provided by private schools in this regard.

The government has taken the decision to increase employers National Insurance contributions by 1.2 percent to 15 percent from 6 April 2025. The secondary threshold will reduce to £5,000 (previously £9,100). The secondary threshold is the level at which an employer is liable to pay National Insurance on each employee’s salary. The government has increased the Employment Allowance to £10,500 (previously £5,000). The allowance will also be extended to all eligible employers by removing the £100,000 cap. This means that businesses will be able to employ up to four workers on the National Living Wage on a full-time basis without a liability to employers’ National Insurance arising. The government has not raised employee National Insurance at this time. This will ensure that the tax burden on individual workers is not increased further (we note that the tax burden has increased due to lack of indexation of the tax bands relative to inflation). The income tax and National Insurance contributions thresholds will be unfrozen from 2028-29 onwards.

As expected, the government has increased the capital gains tax (CGT) rates and maintained the freeze on personal tax thresholds (although it has not been extended). There have been significant changes announced in inheritance tax (IHT) which will see IHT extended to death benefits payable from a pension into a deceased’s estate, as well as changes to both business property relief and agricultural relief. The government also announced the abolition of the non-domicile regime with effect from April 2025. The remittance basis of taxation for non-domiciled persons will be replaced with a residence-based regime. Personal tax thresholds The freeze on personal tax thresholds on income tax and national insurance will not be extended, meaning that from 2028/29 taxpayers can expect the thresholds to again increase in line with inflation. As the thresholds remain frozen, it means that the actual tax burden on workers is increasing because of the effect of inflation. Capital gains tax rate increases The lower rate of CGT is set to increase from 10 percent to 18 percent, with the higher rate increasing from 20 percent to 24 percent. These new rates will align with the residential property rates which remain unchanged. CGT Business Asset Disposal Relief In support of entrepreneurship, the government has announced an increase in Business Asset Disposal Relief (BADR) to 14 percent from 6 April 2025 and 18 percent from 6 April 2026. The lifetime limit for Business Asset Disposal Relief (BADR) will remain at £1 million. Inheritance tax changes The freeze on the IHT thresholds will be extended for a further two years until April 2030. According to the government this means that 90 percent of estates each year will not pay inheritance tax. In a significant move, the government will introduce legislation charging IHT on unused pension funds and death benefits payable from a pension into a person’s estate. This change will apply from April 2027. Agricultural property relief and business property relief The government has announced significant reforms of both agricultural property relief and business property relief. From April 2026, the first £1 million of combined agricultural and business assets will be entitled to 100 percent relief from IHT. The change will see the rate of relief reduced to 50 percent for amounts in excess of £1 million. Non-domicile residents The concept of non-domicile residents will be abolished from April 2025. The remittance basis of taxation for non-domiciled individuals is to be replaced with a residence-based regime.

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.” ENDS

Countries in Latin America and the Caribbean could reduce the widespread consumption of tobacco and its cost to society by better design and administration of tobacco taxes, according to a new OECD report.

The European Commission has adopted a new proposal (DAC9) to help companies with their filing obligations under the Pillar 2 Directive.

Recognised Clearing Systems Securitisation Regulation: Notification of Investment

Revenue has updated the Tax and Duty Manual which details Revenue’s arrangements for implementing EU and OECD exchange of information requirements In respect of tax rulings.  The guidance has been updated to: reflect the DAC8 changes that will bring individuals into scope (section 1.1), clarify spontaneous exchange of information for rulings (sections 3.1 and 4.1), and reflect amendments under DAC8, including updates to the allowable use of information in line with Article 16 DAC (section 3.8). The updated list of jurisdictions covered by the OECD framework with which Ireland has a legal basis to spontaneously exchange information with is contained in Annex 3.

Revenue has updated the Tax and Duty Manual which outlines guidelines for  the write-out of uncollectable tax debts. The preface now includes the Small Company Administrative Rescue Process among the likely types of scenarios where tax may be irrecoverable.

Finance Bill 2024 was recently published and contains the legislative proposals to implement the changes to the stamp duty announced by the Minister for Finance in his recent Budget speech. The revised rates on conveyances of residential property which apply from 2 October 2024 are as follows: 1 percent on consideration up to €1 million, 2 percent on the next €500,000 of consideration, and 6 percent on the balance. Where the conveyance is in respect of three or more apartments in the same apartment block, the rates are 1 percent on the consideration up to €1 million and 2 percent on the on the balance. In addition, the higher rate of stamp duty that applies on certain bulk purchases of residential property (excluding apartments) has increased to 15 percent. Readers should note that transitional measures apply the rates that were in force prior to 2 October 2024 to instruments executed between 2 October 2024 and 1 January 2025 where: there was a contract in place before 2 October 2024 that was binding, and the instrument contains a certificate to this effect.

Next Friday 1 November 2024 is the liability date for 2025 Local Property Tax (LPT). The person liable for the property on 1 November 2024 must pay the LPT charge for 2025, even if they dispose of the property between 1 November 2024 and 31 October 2025. Property owners are reminded that where a residential property has been newly built or it has been refurbished and has become occupied/suitable for use as a dwelling between 2 November 2023 and 1 November 2024, the property is liable for LPT in 2025 by the above deadline. A taxpayer who owns a property which is newly liable for LPT is required to value their property as at 1 November 2021. Revenue’s website contains guidance on valuing newly liable properties, with further information on LPT available on Revenue’s dedicated LPT webpage. 

Readers are reminded that Thursday 7 November 2024 is the return filing date for Vacant Homes Tax (VHT). The VHT is due on residential properties that are liable to Local Property Tax and are occupied for less than 30 days in the year ending 31 October 2024. Further information is available on Revenue’s website.   VHT returns can be submitted via Revenue’s myAccount, ROS or the LPT Portal. The system will guide property owners through the three-step process to review their details, submit their return and make a payment if necessary.