Commentary by Aisléan Nicholson, Tax Partner at Deloitte NI
“Today’s Budget broadly focussed on individuals rather than businesses – not unexpected given we’re in an election year – with many of the measures aimed at leaving people feeling like they have few more pounds in their pockets as soon as possible. While several of the Budget headlines had been in the press over the last few days, the Chancellor still managed to spring a few surprises – though more in the detail than the headlines.
“The 2% reduction in Employee National Insurance to 8% had been broadly confirmed already and will clearly be welcomed by Northern Ireland’s employees, representing a further £450 saving per annum from 6 April for the average worker. For the self-employed the rate will also reduce by 2%, to 6%. However, while presented as a tax cutting measure, for many - even combined with the similar reduction in January announced in the Autumn Statement - it may be mostly outweighed by the effect of frozen personal allowances and income tax thresholds. The UK’s tax burden is still the highest in 70 years.
“The adjustment of the cliff-edge created by the High-Income Child Benefit Charge, increasing the initial threshold to £60k and expanding the taper upper limit to £80k will benefit some families, but there’s no impact for those on lower wages. Childcare costs remain a huge expense for many working families, especially here in Northern Ireland. The potential for future changes to move this to a household measure from April 2026 would make it fairer and may benefit a wider range of families – but we’ll need to await the consultation for further details.
“Changes to the taxation of non-UK domiciled individuals (non-doms) had already been earmarked by Labour were they to enter government following an election. Here Mr Hunt has stolen a march. He has abolished the existing remittance basis regime and announced the introduction of a new simplified regime from April 2025, which sees no tax due on foreign income for the first four years of residency and after that, the individual will be treated as if a UK resident as regards the taxation of income and gains. There are transitional rules for those already here and claiming the remittance basis and given this is already a complex area which has seen much change in the last 20 years, there will undoubtedly be points of detail to work through. Northern Ireland and the UK more generally have many Irish non-doms, due to the common travel area which allows easy ability to take up residency, so these transitional rules will potentially be of interest to those claiming remittance basis. They’ve also earmarked potential changes to the Inheritance Tax regime towards a residence-based regime, though subject to consultation and with no changes before April 2025.
“The reduction in the higher rate of property capital gains tax on residential property from 28% to 24% was an element of surprise, but may have little real impact for many here in Northern Ireland, intended as it is to stimulate landlords and second home owners to sell properties and only benefiting those in the higher rate brackets. In wider measures, the current 5p cut in fuel duty will remain frozen for the next 12 months and alcohol duty remains frozen until February 2025. Tobacco duty is increased to ensure that the new excise duty on vaping products doesn’t disincentivise those considering a switch from cigarettes to vapes.
“And for those with savings, the new British ISA for investment into British assets with an extra £5,000 tax-free allowance may be of interest for tax efficient savings.
“Given the focus was seemingly on individuals, there were only a few measures for business in this Budget. Disappointingly, none of the reductions in Employee National Insurance have been
mirrored in Employer’s National Insurance. The VAT registration threshold has increased from £85,000 to £90,000; an increase that has been much lobbied-for by groups representing SMEs (small and medium enterprises) and will offer a benefit to some Northern Irish businesses, though others may be disappointed with the quantum of the increase - many hoping it would have been uplifted to £100k after seven years without increase.
“The full expensing for capital expenditure regime, which was made permanent in the Autumn fiscal statement, is being earmarked for extension to leased assets which are excluded at present. However, timing is unclear – it will be considered for enactment “when affordable” – we’ll have to wait and see when that is.
“On a positive note, the expansion of support for the creative industries should continue to make the UK an attractive location for production activity and given the value of this sector to Northern Ireland, it is a positive announcement. Overall though, the impact of the Spring Budget for businesses here in Northern Ireland is likely to be muted.
“In terms of spending there was a shout out for Coleraine, which may benefit from the extension of the 10-year Long-Term Plan for Towns, designed to spread prosperity beyond the UK’s largest cities and a promise of £2m to boost global investment and trade opportunities for Northern Ireland. Overall as a result of the announcements, the Chancellor indicated that the Northern Ireland Executive should receive an additional £100m through the Barnett formula.”
Source: Written from press release
