Spring Budget - PwC Northern Ireland comments

Tax implications for businesses

Aine O’Hare, Tax Lead Partner and International Business Lead for PwC Northern Ireland, says:

“This was a Budget aligned with our expectations. There were no significant announcements for businesses, however, smaller organisations will welcome the increase in the VAT registration threshold to £90k from April, which will ease administration and costs. 

“Businesses are seeking stability and consistency to facilitate growth and investment and the UK government’s answer is to commit £2 million to boosting global investment and trade opportunities for Northern Ireland. The NI Executive will need to decide how to invest these monies, along with the previously announced £100m under the Barnett Formula, to encourage further global trade and investment activities into NI. 

“The Chancellor announced today that the UK Government will devolve further power to local leaders to promote growth in their areas. Building on the welcome return of Stormont, many would welcome the local government announcing freeports and investment zones for NI, similar to Great Britain. 

“While not as impactful as the rumoured reduction to the headline income tax rate, there were numerous personal tax announcements, which included the widely expected 2% cut in the rate of employed and self-employed NIC, targeting the working population. The anticipated reform to the ISA system came in the form of a focus on UK-focused assets, with a new British Savings Bond and new British ISA allowing an additional £5,000 annual investment for investments in UK equity (on top of current limits), which will benefit the wealthier savers. The Chancellor also announced a reduction of the higher rate of property Capital Gains tax from 28% to 24% and abolishment of the furnished holiday letting regime and the Multiple dwellings relief (SDLT) which will impact those with properties.” 

Mari McLarnon, Tax Director for PwC Northern Ireland, says:

“It is good to hear that the government has listened to industry feedback on HMRC’s administration of R&D credits, with the announcement that an expert advisory panel will be established to help HMRC advise on R&D claims. Time will tell as to how effective this will be, but if implemented well it could help give more certainty to claimants on the processing of claims. 

“The 100% full expensing relief will be expanded to apply to leased assets, albeit with the caveat of “when it is affordable”. We wait to see the draft legislation to understand how this will operate as well as expected timings.

“The introduction of a new UK Independent Film tax credit and the increase in rate to the Audio Visual Expenditure Credit will be welcomed by our local film and TV production sector.”

NI Economic Outlook

Greg Boyd, economist at PwC Northern Ireland, says:

“This Budget is set against a backdrop of an economy struggling for growth, and prolonged pressure on the cost of living. With the overall tax burden getting close to post-war highs, it remains to be seen whether the Chancellor’s decision to further cut National Insurance Contributions will move the dial in addressing the economic inactivity problem in Northern Ireland.

“The Chancellor pitched this as a Budget for long-term growth. Support for skills and innovation is the only way to close Northern Ireland’s productivity gap with the rest of the UK. Further details on the Northern Ireland Enhanced Investment Zone were unfortunately not provided today, but the Chancellor has announced £2 million, specifically for Northern Ireland, to boost global investment and trade opportunities.”