Following Chancellor Rishi Sunak’s latest Budget, Ulster Business takes a look at reaction from across the world of business
Ailslean Nicholson, tax partner, Deloitte in Belfast
“Many of the key measures in Chancellor Rishi Sunak’s Budget were trailed in advance but it is to be welcomed that citizens and businesses in Northern Ireland will continue to benefit from government support through the Coronavirus Job Retention Scheme, self-employment grants, loan schemes and VAT cuts for several more months.
“For individuals, the absence of increases in income tax or NICs will be welcome, albeit with the freezing of personal allowances from 2021/22 onwards.
“As we await further details about the timeline for lockdown restrictions to be eased in Northern Ireland, the extension of the various schemes gives companies further opportunity to take stock and understand their options and exposures.
“While the rise in the UK rate of corporation tax to 25% from 2023 for companies with profits over £250,000 came as a surprise to some, the increase in tax rates won’t have a hugely significant impact on the majority of Northern Ireland companies. Companies with profits of £50,000 or less will continue to pay a 19% corporation tax rate, with a tapering of the rate for companies with profits in between.
“The super deductions scheme to boost business investment also creates an opportunity for companies who have the capacity to invest to get relief from the government – if they decide to make that investment in the next few years. This won’t be an option for all businesses, but as the economy recovers from the pandemic it could provide an incentive for some to proceed with growth plans.”
Maybeth Shaw, tax partner BDO Northern Ireland
"As Chancellor Rishi Sunak made clear at the outset, the United Kingdom hasn’t faced such a mountain of debt since the end of the Second World War and that guaranteed that his Budget was one of the most anticipated in modern British history.
"How the country repays that debt is something Mr Sunak did not shy away from but, from the outset, he made it clear that it was essential to lay the foundations of recovery and growth before the take-back begins with a corporation tax rise in two years’ time. In the meantime, the package he has laid out seems as positive as could have been hoped for.
"While the corporation tax rise goes against years of careful work and campaigning for a meaningful reduction in levels in Northern Ireland – though the Executive has declined to use its powers to do so - now does not seem to be the time to complain given the wider picture.
"In any case, the key takeaway here is that the current 19% rate will continue to apply to firms with profits of less than £50,000 which is good news for many of our smaller SMEs and micro-businesses. He also confirmed a taper above that £50,000 figure, meaning that only firms with profits of £250,000 or more will pay tax at the full 25% rate. This, again, is good news across and for the region as a whole."
Colin Neill, chief executive, Hospitality Ulster
“Overall, this is a supportive package for our pubs, restaurants, coffee shops and accommodation providers and we hope the measures will be kept under review as we reopen and rebuild our hospitality industry and support the economy as Northern Ireland’s fourth largest private sector employer.”
“We welcome the extension to the furlough scheme to the end of September, which, if lockdown easement goes to plan, will be a great support to businesses in the hospitality sector who will just be finding their feet again. We are encouraged to hear that for only the second time in 20 years that all alcohol duty will be frozen.”
“Maintaining the VAT rate on hospitality at 5% to September and 12.5% until April of next year is an important move by the Chancellor, but we feel that much more can be done with this rate. This temporary relief is only beneficial when the sector is actually opened and trading, and must be reviewed next year to keep the level as low as possible. We must work hard now to make sure that the return to the 20% rate outlined for 2022 is scrapped as that higher level is uncompetitive for us in Northern Ireland due to sharing a land border with the Republic of Ireland.”
“We must see the rates holiday and extended ongoing discounted rate outlined for hospitality in England mirrored here. The alleviation of this crippling business cost, particularly to some parts of the hospitality sector, like pubs, who are calculated differently, must be dealt with especially in light of the complete lack of trade and likely future restrictions.”
Neville Crowe, associate tax partner, EY Northern Ireland
“While well flagged prior to the budget, the extension of stamp duty land tax relief for another three months, limited further reliefs to the end of September and the 95% mortgage guarantee scheme will be welcome for homebuyers nearing completed purchases and should assist the buoyant property market in continuing through this year.”
Mike Cherry, national chairman, Federation of Small Businesses (FSB)
“This Budget will help many small firms with their final push through to September, but there is little here to aid job creation or help people return to work. Ensuring the newly self-employed can now access support marks a big step forward – we’re pleased our campaign has been heard – but directors, who appear to have been left out yet again, will be incredibly disappointed.
Glyn Roberts, chief executive, Retail NI
“Overall, this Budget is a bit of a ‘Curate’s egg’ with a mixture of positive and not so positive measures for the business community in Northern Ireland”
“We welcome the extension of the Furlough scheme until the end of September, but with employers expected to contribute 10% which will rise to 20% in the summer, it does reinforce the need for the Executive to clarify the timescale of its ‘strategy’ of lifting restrictions and allowing businesses to reopen.
“The Chancellor outlined proposals for a £6k Restart Grant per premises for independent retailers and other businesses – this is something we want our own Executive to introduce in Northern Ireland.
“Rishi Sunak has also introduced a year of rate relief for independent retailers in England and this is something our members expect to be brought forward by the Finance Minister.
“The increase of corporation tax could potentially cause problems for our recovery and poses huge questions for the future of Northern Ireland having a similar rate to RoI. That being said, it is welcome that some smaller businesses will be protected from this increase with the maintained 19% small profits rate”
Maeve Hunt, chair of Chartered Accountants Ulster Society
“The job retention scheme has been a lifeline for many Northern Ireland businesses over the last year with almost 110,000 jobs in Northern Ireland currently protected by the scheme. Extending the scheme until September 30, 2021 and keeping the scheme flexible is vitally important and gives employers and employees certainty over the coming months as businesses begin the tentative steps of reopening and bringing employees back into the workplace.”
David Reaney, tax director, EY Northern Ireland
“The expected extension of the reduced VAT rate for hospitality comes with an interesting transition to 12.5% for a further six months to March 31, 2022. There is surprisingly little on VAT in this budget but this flexibility on reduced rates gives a flavour of how VAT can be used creatively as a lever for economic growth in the future. I think there is much more the Government can do with the VAT system.”
Dawn McLaughlin, president, Londonderry Chamber
“This Budget will offer some positive news to north west businesses who are in dire need of support, clarity and certainty. The extension of the furlough scheme until the end of September is a sensible decision and will act as a lifeline for employers who look to prevent further redundancies and job losses.
“However, the new employer contributions on the furlough scheme required from July onwards must focus minds within the Executive. Many businesses already struggle to pay employer contributions on the scheme without revenue coming in. Businesses must be allowed to trade again as soon as safely possible to ensure these increased contributions can be met and jobs can be protected during the summer.
“We also are disappointed that there has not been any flexibility granted on the CBILS loans. Many of these businesses which took these loans have still been unable to trade substantially and will struggle to make repayments. We would call again for the Treasury to look at what flexibilities can be made in relation to repayments and interest rates. We note that these have been replaced by the new Recovery Loans Scheme and we would urge that they are flexible and pragmatic schemes.
Tanya McGeehan, managing director, MCG Investments
“In the property industry in Northern Ireland for the short term the two key areas of focus for MCG Investments were action that might be taken by Government to support first time buyers and confirmation of the expected decision to extend the freeze on stamp duty.
“We are delighted that the Budget has announced positive news on both fronts. The government ‘help to buy’ scheme which we must see operational in Northern Ireland will assist new buyers to the market with a minimum 5% deposit. Those buyers will also have the additional comfort that the treasury will underwrite a chunk of their loan as part of a guarantee agreement with lenders. We also welcome the extension of the freeze on stamp duty until the end of June which will in the first instance ensure that deals on the brink of completion do not collapse, and more importantly continue to stimulate the local market which remains buoyant as we move into the spring.”
Neil Gibson, chief economist, EY Ireland
“The Budget did not shy away from the eye watering cost of dealing with the pandemic but it also did not signal an immediate move towards balancing the books. Unlike the last time the UK emerged from recession, there was no widespread austerity announced, nor a major step up in tax rates, at least not yet. Coupled with the extension of the furlough and self-employed schemes, this was probably as good an outcome as most businesses could have expected.
“The additional £410m resulting from the Budget for the NI Executive will be welcome. Though it will fall far short of the money need to address every ask, it will be helpful and the recent exercise to craft the draft Budget locally should mean thoughts are well advanced on how that money might be prioritised.
“The Budget placed emphasis on innovation, scientific endeavour, and as such the measures to incentivise R&D and capital investment will be very welcome. This represents an attempt to be more precise in driving improvement in productivity and competitiveness through the tax system. For a region with latent potential in the R&D and innovation space, which is reorienting its policy frameworks in this direction, this theme will resonate in Northern Ireland’s economy department.”
Ann McGregor, chief executive, Northern Ireland Chamber of Commerce and Industry
“Businesses will broadly welcome many aspects of today’s Budget, in particular the extension of the furlough scheme, which provides relief for firms facing enormous cash-flow pressures as a result of the pandemic.
“Providing additional, on-going financial support is critical for business survival. Restart grants and the recovery loan scheme will therefore play an important role in enabling firms to reopen safely and sustainably.
“The introduction of new incentives for business investment are also very welcome. The super deduction will give businesses which are performing well the confidence to make capital investments and enable them to play a part in Northern Ireland’s economic recovery, through creating jobs and developing exports.
“It is disappointing that within his Budget statement, the Chancellor made scant specific reference to Northern Ireland. Businesses here face a set of unique challenges post EU exit and there was no indication of any support measures to help them cope with this.
“The £410m in additional funding for Northern Ireland is, however, welcome and we await further information from the Finance Minister as to how it will be spent.”
Kirsty McManus, national director, Institute of Directors Northern Ireland
“The widely trailed extension to the furlough scheme and other measures will provide a welcome boost to businesses as they seek to build a solid platform from which to recover in the coming months.
“Widening income support for the self-employed is also a step forward, however, many company directors will continue to feel left out in the cold as they fall through the net yet again, ineligible for any Covid support grants.
“The prospect of higher taxes will no doubt be difficult for many firms that are still struggling with diminished balance sheets and while the recovery loan package will offer a helping hand to many firms, more needs to be done to catalyse equity investment in our cash-starved start-ups and scale-ups.”
Peter Legge, tax partner, Grant Thornton in Belfast
“There was much in the Budget to please Northern Ireland businesses, particularly the announcement of a super deduction that will provide an incredible clawback incentive of 130% on capital expenditure in plant and machinery.
“Combined with ongoing support to deal with coronavirus, a temporary three year carry back of trading losses and, for those in the hospitality sector, a continuation of the lower 5% VAT rate for six months, there is some relief for businesses.
“Any optimism will however be set against the planned rise in corporation tax to 25% from 2023. While this may still be one of the lowest rates within the G20, it will be double that of our southern neighbours.
“In what could be considered a ‘sign of the times’, he also signalled an increased focus from HMRC on clamping down on tax avoidance. As a result, we expect to see greater scrutiny placed on tax returns particularly from this September onwards."
Roger Pollen, head of FSB Northern Ireland
“Going into this Budget, our key message to the Chancellor was to continue to support jobs and the self-employed. It is therefore welcome that the furlough scheme has been extended, given that it currently supports more than 100,000 jobs in Northern Ireland.
“While the extension is appreciated, the increasing employer cost from July onwards will make the scheme prohibitive for many, as businesses already tell us that the current level of employer contribution is creating intense financial pressure.
“The broadening of the Self-Employment Income Support Scheme (SEISS) to those more recently self-employed and the announcement of a fifth SEISS grant is crucial for those who have been among the most impacted by the economic fallout of coronavirus.
“Tourism and hospitality businesses have borne the brunt of coronavirus restrictions, and have not been able to harness the benefit from the reduced rate of VAT which was previously granted to the sector, as their doors have largely been shut. The extension of a reduced rate of VAT for a further 12 months will be important as this key sector gets back on its feet. Extension of the reduced rate of VAT was one of the key asks which FSB included in our Budget submission to the Treasury ahead of the Budget. The Government should ensure that the broadest range of tourism and hospitality businesses can benefit from this reduced rate.”
Richard Ramsey, chief economist, NI, Ulster Bank
“This Budget was largely as expected. Much of the content had been flagged beforehand, and then there were the big manifesto pledges that were off limits. But that’s not to say it wasn’t a significant Budget, and it may indeed be the last, or penultimate, big spending Budget. Rishi Sunak announced £37.5bn of spending in the current financial year and the next.
“Apart from last year’s Budget, it is, by any historical comparisons outside of the pandemic, a huge amount of spending. What’s concerning though is that spending in future years is going to be cut at progressively larger amounts, and next April will therefore herald the start of four consecutive years of public spending cuts. On the tax front, there were further cuts or extensions of existing tax cuts in some areas but also tax rises in others."
Joanne Stuart, chief executive, Northern Ireland Tourism Alliance
“The Chancellor has laid out additional support that is much needed by tourism businesses to survive the next few months until they are able to reopen. The extension to the Furlough and Self Employed schemes and the extension of the VAT relief are all to be welcomed, however, the introduction of additional employer costs on the furlough scheme from July and the increase of VAT from September adds more stress for businesses who need to be able to reopen and start trading as a matter of urgency.
“With the divergence in approach to easing of restrictions, tourism businesses could be facing a longer period of closure than our counterparts in GB and therefore we need the NI Executive to ensure that schemes announced for England such as the restart grants and extension of business rates relief are extended to our businesses.
“It is hugely disappointed that the Chancellor has not acted on calls for air passenger duty (APD) to be abolished on domestic flights and continues to ignore the real competitive disadvantage that Northern Ireland suffers as a result of double charging on regional flights. GB remains our largest market for tourism and with the success of the UK Vaccination programme, this market will be critical to the recovery of tourism this year.”