Bosses warm to Budget tax cut moves
Published 21/03/2013 | 04:20
A national insurance giveaway for employers and a 1% cut in corporation tax to 20% helped earn the Chancellor's spring Budget a relatively warm welcome from Northern Ireland business.
George Osborne declared in the House of Commons: "I want to send a message to anyone who wants to invest here, to create jobs: Britain is open for business."
But as unemployment in Northern Ireland hit a 15-year high of 8.5%, he did not address Northern Ireland's economy in particular.
There was no mention of whether he would grant the long-held wish of the devolution of corporate tax powers ahead of a crunch meeting on the subject between the Prime Minister David Cameron and the First and Deputy First Ministers next week.
But Mr Osborne did suspend stamp duty on the purchase of shares in companies listed on the Alternative Investment Market (AIM), which would include Andor and First Derivatives, two of just three listed companies in the province.
And he said the patent box measure would provide for corporation tax of 10% on profits resulting from patented products and processes, welcomed by Robert Heron, tax partner at Ernst and Young, as a "huge boost for innovation and the knowledge economy in Northern Ireland".
Mr Heron said the employment allowance – a reduction in company national insurance bills by £2,000 per year – would benefit Northern Ireland's small to medium-sized enterprise sector, in particular.
"In recent times employers have seen real increases in tax and administration costs, for instance through the introduction of pensions automatic-enrolment.
"This announcement will be welcomed by small businesses, particularly in reducing the overall cost of employing staff."
Analysis by the Northern Ireland Office said the employment allowance would help 25,000 businesses offset £2,000 against their bill, and take 10,000 out of having to pay employer national insurance altogether.
It's estimated a company with an employee earning around £30,000 would pay national insurance contributions of around £3,000.
Michael Hall of Ernst and Young said the 1% cut in corporation tax had "narrowed the gap" in competitiveness as a business-friendly location between Northern Ireland and the Republic – and said he did not expect it would have an impact on the UK government's views of a further cut in Northern Ireland's own rate.
Martin Fleetwood, a tax partner at PricewaterhouseCoopers, added: "If the proposal to reduce the Northern Ireland rate to 12.5% or so goes ahead, the cost will now be reduced – if it doesn't we will still be a remarkably attractive region for new inward investment with a raft of tax incentives like research and development, patent box and a 20% rate to take to the international markets."
Mark Nodder, president of Northern Ireland Chamber of Commerce, said the Budget's 'pro-growth' measures should help support businesses but said the 1% corporation tax cut was "not enough".
"Ahead of the First and Deputy First Minister's meeting with the prime minister on March 26, we urge the Treasury to speed up their response on the call from the Northern Ireland Executive and the local business community for a reduction in corporation tax to the rate currently operational in the Republic."
David Wright, director of commercial property consultants CBRE, said: "On a day when Northern Ireland announced its highest unemployment for 15 years, we would have liked to have seen a further lowering of corporation tax to attract new jobs, the introduction of enterprise zones to kick-start development, and a rating revaluation to assist the struggling retail sector."
Peter Bunting, assistant general secretary of trade union ICTU, hit out at the "ruinous cult of austerity".
He said: "We believe that a real plan is needed to invest in real jobs and real growth.
"The alternative is the slow spiral of decline and stagnation being inflicted upon the people of Northern Ireland by a far-away Chancellor with a far-out dogma – the ruinous cult of austerity."