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Call for an NI corporation tax rate after Budget hikes it up to 25%

Move prompts Republic to ramp up its selling points compared to UK

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Angela McGowan

Angela McGowan

Angela McGowan

Northern Ireland should aim to set its own low rate of corporation tax after a jump in the UK levy to 25% in the Budget, it has been claimed.

Chancellor of the Exchequer Rishi Sunak said to help rebalance the public finances, the levy for big firms with profits of over £250,000 will be put up from 19% to 25% in 2023.

Angela McGowan, Northern Ireland director of business group the CBI, said the move would prompt a "sharp intake of breath".

Companies with profits of £50,000 or less will continue to pay at 19%, with staggered increases for those with profits over that level.

He also announced plans for free ports where special tax rates will apply around the UK, including here. However, only locations in England were confirmed.

Mr Sunak also said Northern Ireland would receive another £410m for its Covid response and confirmed an extension of the furlough scheme until September, with firms required to contribute 10% of wages for hours not worked from July.

Business groups here said that should prompt the Executive here to ensure its reopening plan enabled firms using furlough to at least be trading in part by July.

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There was also renewed support for self-employed people, with those who have just filed tax returns for 2019/20 now eligible for grants. Mr Sunak unveiled a new "super-deduction" enabling firms who invest in their business to offset the cost, plus another 30%, against their tax.

Economy Minister Diane Dodds said more information was needed on how Northern Ireland firms would benefit from other initiatives, including a scheme for companies to boost management and digital skills.

Chartered Accountants Ireland said the rise in corporation tax should prompt Northern Ireland to set its own low rate, enabling it to compete with the Republic's 12.5%. Last night the tax increase was being lauded as good news for the Republic as it also offered European market access lacking in the UK. Dermot O'Leary of Goodbody Stockbrokers said it demonstrated the "stability" of Ireland's corporation tax in contrast to UK "instability". Finance Minister Conor Murphy welcomed the extension of furlough, support for newly self-employed, and additional funding for the Covid response.

But he said money for everyday public spending had only increased by £4.2m, and that there was no new capital funding while the requirement on firms to contribute to furlough pay from July could be counter-productive. "I am concerned that asking employers who may not be fully operational to find the cash for these wage costs could lead to redundancies."

The Budget also contained measures ostensibly confined to England, including an extension of the business rates holiday for retail, hospitality and tourism.

But Mr Murphy said he will bring proposals to Executive colleagues on his plans for next year's rates holiday in NI.

Ann McGregor, chief executive of the Northern Ireland Chamber of Commerce, said many aspects of the Budget were welcome but that there was "scant specific reference to NI". "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."

Ms McGowan said the corporation tax increase sent a worrying signal to anyone preparing to invest in the UK. "This is a particularly acute concern for Northern Ireland's post-Brexit competitiveness on the island of Ireland."

And she urged a "relook" at how NI competes with the Republic's 12.5% rate.

NI has held the power to set a lower rate of corporation tax since 2015 although it has not used the power.

Norah Collender, professional tax leader at Chartered Accountants Ireland, said: "A lower rate of corporation tax in the region coupled with the dual benefit of having access to both the UK and the EU's single market for goods could put NI in a unique position to attract foreign direct investment into the region, particularly in the manufacturing and distribution sectors."

Estate agent Simon Brien said the extension to the stamp duty holiday would be well received by the market. He added: "However, it has by no means been the main driver to market confidence and people's lifestyle choices are undoubtedly the dominant factor."


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