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Chartered Accountants Ireland has today circulated the Institute's Key Policy Priorities, based on member engagement, as discussions commence on the formation of the next Government. Focused on supporting small business and improving childcare provision for working parents, we will continue to amplify our members' voices as the negotiating process continues.

Chartered Accountants Ireland is warning that family-owned businesses in Northern Ireland, including those in the agricultural sector, will be the biggest losers from the recent tax changes announced in the Autumn Budget. Impacted family businesses are now facing a triple whammy of mounting employment costs, higher Capital Gains Tax on sale or succession, and an unexpected Inheritance Tax bill when passing businesses on to the next generation. Commenting, Janette Burns, Chair of the Institute’s Northern Ireland Tax Committee said: “Northern Ireland family-owned businesses are the heartbeat of our economy with around 80% of businesses here either family owned or managed. Many of these businesses, particularly those who employ minimum wage workers, will face a stark increase in their wage bill from April 2025 as a result of the changes to Employer’s National Insurance Contributions and the National Minimum Wage. For example, a business with 50 part-time staff aged 18-20 working around 15 hours per week will have to find an additional £65,000 from April 2025 just to pay wages. This will particularly impact businesses reliant on part time staff such as in the retail and care sectors but especially for already struggling hospitality businesses.” Reflecting further on what’s still to come for Northern Ireland family-owned businesses, Janette commented: “From 30 October 2024 the rates of Capital Gains Tax have already increased from 10% to 18% and 18% to 24% ahead of a stepped reduction in the benefit of a key Capital Gains Tax relief, Business Asset Disposal Relief, commencing from April 2025. Then, from April 2026 the benefit of two key Inheritance Tax reliefs is being reduced by 50% for businesses (including farms) worth more than £1 million. This means that further down the tracks the same family business owners are facing a significantly higher tax bill when the time comes for the next generation to take over. Those who are approaching retirement will now pay more Capital Gains Tax either when they sell the business or pass it on to their successors whilst still alive. On a death transfer, the Budget’s Inheritance Tax changes from April 2026 mean that whomever inherits the business will be hit with an extra 20% Inheritance Tax bill on any value over £1 million. Figures suggest that an estimated 33% of farmers in Northern Ireland will be affected. Many family-owned businesses and farms here started out small 20 or 30 years ago and through sheer hard work, sacrifice, and determination have grown in size. It would not be unusual for those businesses to now be worth several million pounds. For a business or farm worth £2million, these changes will add as much as £200,000 onto the family Inheritance Tax bill. The reality is that many will be forced to sell the business or farm to pay this new bill.”

After a frenetic three-week campaign, General Election 2024 has essentially left us where we began – with a likely Government led by Fianna Fáil and Fine Gael albeit this time without the Greens.  The precise makeup of the final coalition is as yet unclear. However, given that the outgoing coalition’s collective seat take will likely not leave them far off the 88 seats needed to command a Dáil majority, it is safe to say that whoever gets the nod to make up the numbers won’t have the same bargaining power to influence policy as some previous smaller coalition partners may have had.  Against this backdrop, it’s safe to assume that the next Programme for Government will largely, if not entirely, be dictated by the policy priorities set out by Fianna Fáil and Fine Gael in their general election manifestos. So, what might this mean for small businesses?  Addressing the cost of doing business  In their respective pre-election pledges, both parties were keen to highlight their awareness of the rising costs of doing business. In Fianna Fáil’s case, they pledged to address this by establishing a new “Cost of Business Advisory Forum” to conduct a review of all current business costs and taxes.  According to the party’s manifesto, “this forum will be consulted before introducing new legislation or policies that affect small businesses.”  Likewise, in its manifesto, Fine Gael took a similar tack by reasserting its commitment to apply what it calls the “SME test” to any new legislation coming down the track – a test that would essentially require all departments to first assess the impact on small businesses of any new measures being proposed prior to enactment.  So, with both parties essentially singing from the same hymn sheet on the issue, it is likely that we will see the announcement of some sort of new initiative designed to limit the amount of new regulations that could further add to the cost burdens of small businesses.   Employers’ PRSI   Again on the issue of reducing business costs, both parties also made specific commitments to reduce the Employers’ PRSI burden where lower earning workers are employed.  While Fine Gael favoured a temporary, three-year PRSI rebate based on the number of lower-earning workers on a company’s payroll, Fianna Fáil pledged an outright reduction to the lower rate of employers PRSI by 1.5 percent.  The logic behind the latter proposal (we know this because the Institute’s pre-election manifesto originally proposed it) is to mitigate the concurrent 1.5 percent uptick in payroll costs due to hit many employers in late 2025 through the introduction of pensions auto-enrolment.  So again, with both parties essentially aligned here, it’s fair to say that a reduction or rebate of the lower rate of Employers’ PRSI in some format will also likely feature in the next Programme for Government.   VAT on hospitality  The issue of VAT on hospitality was a notably contentious issue in the run up to Budget 2024 with the Government ultimately refusing to reinstate the reduced nine percent rate despite extensive lobbying from the sector.  However, the way in which each party subsequently approached the issue in their election manifestos is perhaps telling of a policy fissure between the two.  Fine Gael clearly favours a reduction, albeit to a midway rate of 11 percent while Fianna Fáil is notably silent on the issue in its manifesto, instead placing its focus on maintaining VAT on gas and electricity bills at nine percent for the next five years.  How this difference in approach will ultimately play out in the final Programme for Government is as yet unclear. However, Fine Gael’s pledge to implement a reduction will no doubt have created an expectation from the hospitality sector that some sort of action will be taken on reducing the rate.  Energy supports  High energy costs continue to be an issue for many small businesses and the manifestos of both Fianna Fáil and Fine Gael have again sought to tackle this through further one-off grant schemes.  In Fianna Fáil’s case, the party has pledged to introduce a successor to the Increased Cost of Business/Power Up grant schemes to help hospitality and retail businesses deal with higher energy bills.  Likewise, Fine Gael has promised a new energy cost grant scheme, “to help businesses lower their energy costs, enabling them to operate more sustainably.” Given that the two parties appear to be broadly aligned on the issue, a new round of temporary energy support grants seems likely.  However, what is less clear is how the announcement of these relatively piecemeal measures will be received by businesses, particularly given the slow uptake of previous such schemes over the past two years. Stephen Lowry is Head of Public Policy at Chartered Accountants Ireland

  In this week’s Sustainability/ESG bulletin read about the final agreement at the global climate conference COP29, socially responsible public procurement, decarbonisation of commercial buildings, the Government response to business flooding, and an All-Ireland Climate Action Pilot Programme for SMEs. Also covered are consultations on the UK ETS, moves to streamline overlapping EU sustainability regulations, reports into CSDDD implementation, and the risk and return of impact investing funds, and more.     Ireland news   Institute responds to IASB exposure draft on climate-related risks in the financial statements" Chartered Accountants Ireland’s Professional Accounting Team has issued its response to the International Accounting Standards Board’s (IASB) Exposure Draft “Climate-related risks and Other Uncertainties in the Financial Statements”. The Exposure Draft, which proposes eight examples illustrating how entities may apply the requirements in IFRS Accounting Standards to report the effects of climate-related and other uncertainties in its financial statements, was issued by the IASB in July 2024. COP29 – the Baku Finance Goal Chartered Accountants Ireland covered the global climate summit ‘COP29’, which concluded in the early hours of Sunday morning, 24 November in Baku, Azerbaijan. The gavel descended on the fourth longest COP on record agreement on ‘The Baku Finance Goal’, a new finance target for tackling climate change. Read our COP29 coverage.    Socially Responsible Public Procurement The Department of Rural and Community Development has published research identifying future trends of social enterprise development, inclusive and ethical supply chains, and an overall shift towards socially-conscious business models. The publication, Buy social' and Socially Responsible Public Procurement Research Paper, benchmarked 10 countries across the UK, Europe and North America and delved into the concept of ‘Socially Responsible Public Procurement’ (SRPP), which aims to achieve positive social outcomes in public procurement contracts. Decarbonisation of Commercial Buildings Roadmap - update The Climate Action and Energy Policy Unit of the Department of Enterprise, Trade and Employment has published an update on its work on decarbonising the commercial built environment. In a presentation to the Retail Forum Green Transition Working Group, the Unit provided a status update to the Decarbonisation of Commercial Buildings Roadmap, which is in final draft form and awaiting sign off by the incoming Government, after which it be published. New Climate Action Roadmap published by DHLGH The Department of Housing, Local Government & Heritage has published a Climate Action Roadmap detailing how it aims to meet its 2030 carbon and energy efficiency targets and implement the requirements of the Climate Action Mandate 2024. Corporate and Business Support, and the Local Government Audit Service are among the 10 divisions through which the Department will carry out its work to meet the requirements of the mandate.  Government response to flooding for businesses The Minister for Enterprise, Trade and Employment, Peter Burke, T.D., has confirmed that his department will seek government approval to reopen the Emergency Humanitarian Flooding Scheme. The scheme has previously been opened to provide support for businesses who had been unable to secure flood insurance and were impacted by flood water as a result of severe weather events. All-Ireland Climate Action Pilot Programme for SMEs launched Business in the Community Ireland (BITCI) has launched its insights report on an All Ireland Climate Action Pilot Programme for Small and Medium sized Enterprises (SMEs). BICTI developed the pilot programme in response to a strategic review of SMEs in Ireland in late 2023 to explore how BITCI could support the decarbonisation transition of SMEs. The research shows how SMEs are already being impacted by climate change, that engaging suppliers meaningfully is crucial in successfully decarbonising supply chains, and that expanding national engagement and exploring international collaborations will also be key in developing future programmes.   Northern Ireland/UK news The consultation on adraft environmental principles policy statement (EPPS), issued by the Department of Agriculture, Environment and Rural Affairs (DAERA), is closing shortly on Monday, 9 December. The statement sets out how five internationally recognised environmental principles should be interpreted and proportionately applied to policy making. When fully in force, all Northern Ireland government departments and United Kingdom government ministers making policy for NI will have a statutory duty to have due regard to the statement. The consultation close on Monday, 9 December. The UK Environment Agency has launched a consultation on the updated charges proposed for United Kingdom Emissions Trading Scheme (UK ETS) customers, as well as customers of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), and charges for the UK’s Kyoto Protocol national registry (the national registry). The consultation also sets out charge proposals for areas of UK ETS expansion. The consultation will close on Friday 24 January 2025, and further details can be found on the Environment Agency website.   The Offshore Wind Growth Partnership (OWGP) is supporting businesses looking to enter or grow within the offshore wind supply chain through the Wind Expert Support Toolkit (WEST). Applications will close at 5pm on Friday 24 January 2025 and details of the WEST programme and how to apply are here.   Europe news The European Commission has reportedly announced plans to streamline overlapping sustainability regulations into a single, cohesive framework, or ‘omnibus regulation’. The aim is to reduce the regulatory burden on companies while maintaining the EU’s leadership in sustainability. Certain sustainability legislation, including the  Corporate Sustainability Reporting Directive, the EU taxonomy and the Corporate Sustainability Due Diligence Directive may be amended into a single omnibus regulation. The EU executive is still to make a final decision on the issue.   World News The World Benchmarking Alliance has published a briefing titled How to ensure inclusive and impactful CSDDD implementation, with recommendations for governments, civil society and businesses on how to “engage constructively” with CSDDD implementation. Recommendation for business include preparing proactively for compliance and engaging transparently with government and stakeholders; recommendations for investors include integrating CSDDD compliance into investment criteria and stewardship and demanding transparent reporting from investee companies.   The fifth and ostensibly final round of talks on securing a legally binding and universal plastic treaty failed to deliver consensus this week Busan, South Korea. Commenting at the outset for the talks, Intergovernmental Negotiating Committee chair Luis Vayas Valdivieso, said: “Without significant intervention, the amount of plastic entering the environment annually by 2040 is expected to nearly double compared to 2022.”The OECD calculates that the introduction of strict policies targeting the full plastics lifecycle would result in a global GDP contraction of 0.5 per cent in 2040 but that the costs of inaction are likely to be far higher   A report into impact investing has found that impact funds tend to be less exposed to market risk than traditional venture capital and private equity funds. The report, The Risk and Return of Impact Investing Funds, published by Journal of Financial Economics, reportedly used a data set of 94 private markets impact funds covering cash flows from 1999 to 2021 to address a lack of publicly available impact fund cash flow data.   Spain’s government has reportedly approved a new “paid climate leave” entitlement of up to four days to allow workers take time off if unable to travel to their place of work in the event of official warnings of extreme weather conditions. The measure was agreed a month after floods in Valencia — estimated to cost the country 0.2 per cent of GDP this quarter — killed more than 200 people.    A report on the economic cost of extreme weather commissioned by the International Chamber of Commerce has found that climate-related extreme weather events have cost the global economy more than $2 trillion over the past decade. A 2023 report by S&P Global, Quantifying the financial costs of climate change physical risks for companies, had previously shown that the financial impacts of climate change on major companies nearly doubled from the 2050s to the 2090s, and that by the 2050s, the costs of the physical hazards of climate change could equal an average of 3.3% (up to 28%) a year of the value of major companies’ real assets. Commenting on the 2024 reporting findings, ICC secretary-general John Denton described ‘a real and tangible cost to delaying the action needed to stem climate change’ and that ‘from a business perspective, the urgency of coordinated and collective action to accelerate emissions reductions and build resilience to changing weather patterns cannot be overstated’.   Technical update Our Professional Accounting team have a published their Technical Roundup, with updates on the EU Taxonomy,  KPMG’s Survey of Sustainability Reporting, a recent EFRAG webinar on ESRS for Non-EU Groups, updates from IFRS and ISSB and a link to the Accountancy Europe November 2024 Sustainability Update.   Did you know? Entries are now open for the Business & Finance ESG Awards which celebrating businesses and individuals actively striving to address and progress ESG issues in their organisation. Articles Businesses need to improve reporting sustainability matters, ACCA says (AccountancyToday) Strengthening ESG strategies ahead of 2025 reporting deadlines (Accountancy Ireland – Briefly)   Upcoming Events   MEANZ Business Webinar: Net Zero and Decarbonising your business Mid and East Antrim Borough Council is inviting businesses to the latest webinar in the MEANZ Business Net Zero Insights Series. You will hear about what Net Zero 'MEANZ' for businesses and get practical tips from expert speakers on how you can decarbonise to reduce overheads, save costs and get competitive advantage. Speakers at the event will be James Dunlop, Senior Manager, Carbon Trust, and Mark McEvoy, Sales Director, Camden Group. Virtual, Thursday 5 December, 11.00 – 12.00            You can find information, guidance and supports to understand sustainability and meet the challenges it presents in our online Sustainability Centre.  

The global climate summit ‘COP29’ has concluded in the early hours of Sunday morning, 24 November, a good 32 hours after the summit was scheduled to finish in Baku, Azerbaijan. The gavel descended on the fourth longest COP on record with the agreement ‘The Baku Finance Goal’, a new finance target for tackling climate change. This New Collective Quantified Goal (NCQG) replaces the goal initially agreed in 2009 for developed nations to provide $100 billion annually in climate financing for developing countries.  The final figure of $300 billion a year for climate vulnerable countries has been the subject of much debate, either derided as ‘totally unacceptable and inadequate’ and ‘sleight of hand accounting’, or heralded as an ‘insurance policy for humanity’ and ‘keeping the core principles of the Paris Agreement alive’. COP summits have long been criticised as ‘talking shops’, seen by many as overly influenced by fossil fuel lobbyists. The summits are characterised by round after round of negotiations between the parties (countries) which have agreed to participate in – and be bound by – the UN treaties to the United Nations Framework Convention on Climate Change Treaty (UNFCCC). Progress appears incremental – even tortuous at times – when what is required is urgent, sweeping change in the face of existentialist crises. This was the first COP to have climate finance as the main item on the agenda. The new Baku Finance Goal’ of $300 billion a year is to help developed countries build resilience, prepare for disasters and cut emissions of planet-warming greenhouse gases. However, the new goal falls far short of the $1 trillion that was generally accepted to be the amount needed per year by 2030, rising to $1.3tn by 2035. While a larger overall target of $1.3 trillion per year is posited in the final agreement, most of this is to come from private sources, despite urgent calls from developing countries for it to come from public sources instead. Speaking from Baku, Ireland’s Environment Minister Eamon Ryan, described the agreement as “far from perfect and it does not go nearly far enough, particularly on mitigation, gender and human rights – but it keeps the core principles of the Paris Agreement alive and it gives us a basis to work from as we move forward to make COP30 in Brazil transformational”. EU climate envoy Wopke Hoekstra said COP29 would be remembered as “the start of a new era for climate finance”.  However, UN Climate Change Executive Secretary Simon Stiell warned in his remarks made at the closing of the summit that “like any insurance policy – [the new finance goal] only works – if premiums are paid in full, and on time. Promises must be kept, to protect billions of lives.” Fossil fuels A major theme of COP29 was to build on last year’s ‘global stocktake’ commitment in the UAE to transition away from fossil fuels. The parties Baku failed to reach an agreement on this key issue, with the text lacking any explicit mention of the commitment to “transitioning away from fossil fuels”. The parties chose instead to hold over the decision to COP30 next year in Brazil. Voluntary carbon market Article 6 of the Paris Agreement had set out how countries can pursue voluntary cooperation to reach their climate targets, but it took a decade of deliberation for countries to finally agree a deal at COP29 to allow carbon trading between nations. The framework allows countries to trade carbon credits with each other, as well as companies and, critically, details an accounting system for how a country selling a credit can deduct that from its national carbon ledger to prevent the same credit from being used twice. Although experts worry that the carbon market rules will not be strong enough to weed out bad offsets, many see the agreement as welcome development, with hopes that the signing off of the rules will create an international carbon trading system for countries to meet their Paris commitments. What happens next COP30 will take place in Belém, Brazil. It will focus on efforts by each country to reduce national emissions and adapt to the impacts of climate change (the so-called ‘NDCs’ or ‘nationally determined contributions). It will also be the last of a so-called ‘troika’ of COPs, which started with COP28 in Dubai in 2023 and progressed through COP28, with its focus on climate finance. The idea behind that troika, agreed on at COP28, is that the three COP presidencies will collaborate on various activities to raise ambition across all pillars of the Paris Agreement on a Roadmap to Mission 1.5°C, ‘from Baku to Belém and beyond’. In addition to highlighting the importance of protecting the Amazon rainforest for the planet's ecological balance, COP30 has been described by G20 leaders as “our last chance to avoid an irreversible rupture in the climate system”. Read more Making sense of the COP29 outcome (Financial Times) The Irish Times view on Cop29: multilateral approach on climate just about hangs on (Irish Times) COP29: Key outcomes agreed at the UN climate talks in Baku (Carbon Brief)

COP29 – the 2024 global climate summit – is coming to a close, after two weeks of negotiations in Baku, Azerbaijan. Climate finance has been a major focus of the summit, particularly the setting of a new finance target called the New Collective Quantified Goal, or NCQG, for tackling climate change. The goal will replace a goal initially agreed in 2009, when developed nations pledged to provide $100 billion annually in climate financing for developing countries.  (Here’s a quick refresher on COP from the Chartered Accountants Ireland website). X marks the spot in the draft of the agreement Negotiations on the first draft agreement on climate finance have failed to produce a document acceptable to all parties. It was immediately deemed inadequate by EU negotiators, with EU Climate Commissioner Wopke Hoekstra stating “As for the text overall, I'm not going to sugarcoat it - it is clearly unacceptable as it stands now”. The 10-page draft of an agreement on a ‘new collective quantified goal’ (NCQG) did not contain even a range of values for the headline goal, recognising that developing countries need a commitment of at least “USD [X] trillion” per year. This mystery figure – and who will pay it – are among the sticking points at COP this year, which can be summarized as follows: How much money? The amount of finance needed by developing countries to fight climate change has been the subject of much debate. Rich nations have pledged $100 billion a year. Many developing countries say that $1.3 trillion a year is accurate. (For context, $2.4 trillion was spent on weapons in 2023, and at least $1 trillion on fossil fuel subsidies in 2022.)   Grants or loans? Developing countries are advocating for the money to be given in the form of grants from rich governments, and not loans which would add to the national debt of vulnerable countries. Speaking at the summit, Ireland’s Minister from Climate Eamon Ryan, described this as “a fundamental justice issue”, and stated that COP is about “changing the financial system so that fundamental injustice does not continue into the future.” (Minister Ryan has been asked by the UN and the Cop29 presidency to lead negotiations on adaptation).   Public or private? Developed countries want all sources of finance, including public money and private investment, to be counted toward the goal.   Which countries should pay? The definition being used at COP of a ‘developed’ country dates from 1992. Delegates from both developed and developing countries have described this definition as ‘obsolete’. They advocate for China and India in particular to no longer be treated as developing countries and to provide financial assistance to poorer countries. Other issues Fossil fuels At last year’s COP in Dubai, the final agreement contained a pledge to “transition away” from fossil fuels. It was the first time in the history of the climate negotiations that nearly 200 countries agreed to even mention fossil fuels in the agreement. Many commentators have expressed concern that this pledge is being neglected at this year’s COP in Baku, and the high number of representatives from fossil fuel companies, and the location for the conference itself, has drawn criticism from several sources: Azerbaijan’s total economy is heavily dependent on oil and gas, which account for about half of and more than 90% of its exports, and the Chief Executive of the international climate summit was secretly filmed promoting fossil fuel deal by an undercover climate organisation days before the conference was to get underway. Who was there – and who wasn’t Another issue of note this year was the absence of various world leaders (including Ireland’s), although US President Joe Biden did travel to the Amazon to launch the new Brazil Restoration & Bioeconomy Finance Coalition (BRB Finance Coalition), members of which include the World Bank Group and the World Economic Forum. Europe’s official COP29 delegation was led by Lídia Pereira, with European Commissioner for Climate Action Wopke Hoekstra convening a press conference with representatives of ‘like-minded ambitious countries’ to underscore their commitment to delivering Nationally Determined Contributions (NDCs) that are aligned with a 1.5°C trajectory. Ireland’s national statement to the summit was delivered by Minister for Climate Eamon Ryan, who highlighted the importance of a successful conclusion to the talks: “Giving up would be unforgiveable, but success can help restore belief in multilateralism and restore confidence.” Another Irish commentator at COP29 was the Chair of the Elders and former President of Ireland Mary Robinson. Mrs Robinson drew attention to the discrimination and inequality that climate change causes globally to women and children and was critical of what she described as attempts by the Vatican, Russia and Saudi Arabia to blocking progress on a gender-related climate action plan.   The Global Carbon Market Another important highlight of this COP was the endorsement of a global carbon market framework under Article 6 of the Paris Agreement. Under Article 6 countries are able to transfer carbon credits earned from the reduction of greenhouse gas emissions to help one or more countries meet their climate targets. Although the COP29 presidency welcomed this ratification of the last part of the Paris Agreement as an ‘early win’,  other commentators fear that there are still unresolved fundamental and technical issues. Separately, the Integrity Council for the Voluntary Carbon Market has approved three methodologies for generating high-integrity carbon credits aimed at reducing emissions from deforestation and forest degradation in developing countries (‘REDD+’). The multi-stakeholder-led independent not-for-profit organisation was set up in 2021 in response to the final recommendations of the Taskforce on Scaling the Voluntary Carbon Markets (TSVCM).   Read more Fight over cash at climate summit as time runs out at COP29 (BBC) COP29 climate talks enter final phase: What happens next? (RTÉ News) UAE urges countries to honour fossil fuels vow amid Cop29 impasse (The Guardian) COP29: The selfish case for climate finance - New academic paper argues climate-focused grant finance is in rich countries’ economic interest (Financial Times) – Premium G20 helps lift mood at Cop29 climate talks (Irish Times)