Northern Ireland business has been reacting with dismay to the UK Labour Government’s first budget for several year, and Rachel Reeves’ first as Chancellor.
The unpausing of the Growth Deal packages for the Causeway Coast & Glens and Mid South West Region have been welcomed, as has the additional £1.5 billion in funding to the Northern Ireland Executive.
But the Chancellor’s tax raids have been met with anger and disappointment.
Northern Ireland Chamber of Commerce CEO Suzanne Wylie was quick to react.
“While businesses acknowledge the need to stabilise public finances and support investment in public services, the alarming acceleration of the tax burden on businesses is deeply concerning. In the absence of material growth, this will add to already high business costs and is likely to impact confidence and investment intentions,” said Suzanne.
“For businesses in Northern Ireland, there are further unknowns. While the additional £1.5 billion in funding for the region is welcome, we need the NI Executive to move promptly to publish its draft budget so that we can start delivering greater certainty for people and businesses here too.”
Alan Gourley, Partner at Grant Thornton’s Belfast office, took a similar line. “Many employers throughout Northern Ireland will be dismayed by the Autumn Budget, with the increase in the rate of employers’ National Insurance, the reduction in the threshold to which the rate applies, and the increase in the national living wage set to significantly hit the bottom line for a lot of companies,” he said.
“Perhaps even more alarming, however, is the seismic impact that the changes to inheritance tax will have on a lot of family businesses. Indeed, Northern Ireland has such a strong culture of retaining companies within the family that these changes will affect this region more than most.
“The tweaks to a few lesser-known rules, such as the reform of both business relief and the ability to pass on agricultural land tax-free, mean businesses need to deal with a major extra exposure to tax.”
Eamonn Donaghy, Tax Partner and Executive Chairman at HNH, adopted a balanced view.
“The Chancellor described the Government’s mission as being to grow the economy, and announced an array of other spending measures with that in mind. It is to be hoped that the tax measures announced, while admittedly painful, will not discourage entrepreneurs from playing their part.”
Alan Lowry, Policy Chair at the Federation of Small Businesses Northern Ireland, pointed to a continuing anomaly.
“As in previous years, the Chancellor has seen fit to protect small businesses in England from an inflationary hike in business rates – by freezing the small business multiplier and extending business rates relief for small firms in retail, hospitality and leisure. Regrettably, the Stormont Executive has consistently failed to pass on this assistance to businesses in Northern Ireland, despite having received the funds from Westminster, so we renew our call on Executive Ministers to respond positively this time round.”
“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,” says Gillian Sadlier, Chair of Chartered Accountants Ireland Ulster Society. “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.”
Johnny Hanna, Partner in Charge at KPMG in Belfast said: “The government has not been shy in targeting employers in the Autumn Budget. The hike in the rate of national insurance contributions to 15% from 13.8% and the lowering of the threshold at which it applies, together with the increase in the minimum national wage to £12.21 an hour from £11.44 will have a significant detrimental impact on the wage bills of employers in Northern Ireland and beyond. Both had been well flagged but will still hurt businesses and potentially damage investment in the future.”
One of the hardest hitting reactions came from Joel Neill at Hospitality Ulster.
“While our hospitality colleagues in England and Wales are rightly upset at the lowering of the 75% business rates relief to the 40% announced in today’s Budget, hospitality businesses in Northern Ireland were never party to this relief. Paired with the Budget’s increase of the National Minimum and Living Wage, increase in employers’ National Insurance contributions and decrease in the threshold for those contributions, today’s Budget will have done nothing but increase the cost of doing business for hospitality.
“We all want to see people paid more. Our members want to reward good work and make work pay but what is being asked of businesses is simply unsustainable if taxes are going to shoot up at the same time. Without the extension of rates relief to Northern Ireland’s hospitality businesses or a decrease to VAT, these measures will only threaten employment and businesses in the sector.”