The Spring Budget announced by the Chancellor of the Exchequer Philip Hammond in the Commons today has signalled his intent to create a fund for the BREXIT transition. Below are some responses from different organisation to the budget.
nibusonessinfo.co.uk Comments On Spring Budget
* How Does The Budget Affect Northern Ireland Businesses?
The Chancellor, Philip Hammond, delivered his Spring Budget 2017 (link is external) statement on Wednesday 8 March 2017. We have summarised the key points from the Budget and highlighted key issues affecting Northern Ireland businesses.
* Growth
Growth forecast for the next few years:
2.0% in 2017
1.6% in 2018
1.7% in 2019
1.9% in 2020
2.0% in 2021
Government borrowing and debt
* Borrowing:
£51.7 billion in 2016-17
£58.3 billion in 2017-18
£40.8 billion in 2018-19
£21.4 billion in 2019-20
£20.6 billion in 2020-21
£16.8 billion in 2021-22
Debt forecast:
86.6% in 2016-17
88.8% in 2017-18
88.5% in 2018-19
86.9% in 2019-20
83.0% in 2020-21
79.8% in 2021-22
Northern Ireland specific announcements… an additional funding of almost £120 million for the Northern Ireland Executive.
* Corporation Tax
From April 2017 the Corporation Tax rate is to fall to 19% and then fall again to 17% from April 2020. Northern Ireland plans to introduce a Corporation tax rate of 12.5% in 2018.
* Tax avoidance and evasion
From July 2017 the government will introduce a tough new financial penalty for professionals who enable a tax avoidance arrangement that is later defeated by HM Revenue & Customs.
* Business rates
A number of changes for business rates were announced but these do not apply to Northern Irela
* Income tax
The personal allowance will rise to £11,500 from April 2017 and £45,000 for the higher rate threshold. The government also confirmed their commitment to increasing these thresholds to £12,500 and £50,000 respectively by the end of this parliament.
* Self-employed taxes
The Chancellor highlighted the differences between the National Insurance contributions (NICs) of the employed and self-employed. For example, an employee earning £32,000 will incur between him and his employer £6,170 of NICs. A self-employed person earning the equivalent amount will pay just £2,300.
To address this issue, Class 2 NICs are to be abolished in April 2018 and from this date the main rate of Class 4 NICs for the self-employed will increase to 10% with a further increase to 11% in April 2019. Since Class 4 NICs are chargeable as a proportion of profits, all self-employed people earning less than £16,250 will still see a reduction in their total NICs bill.
* Savings
As announced previously the Lifetime ISA will be introduced in April 2017. The annual ISA allowance will increase to £20,000 from April 2017.
The new NS&I bond announced at the Autumn Statement will be available from April 2017 and will pay 2.2% on deposits up to £3,000.
* Dividend Allowance
The tax-free dividend allowance for director/shareholders will be reduced from £5,000 to £2,000 from April 2018.
* Duties and levies
Vehicle Excise Duty rates for hauliers and the HGV Road User Levy have been frozen. A new minimum excise duty on cigarettes will be introduced based on a pack price of £7.35.
There are no changes to previously planned upratings of duties on alcohol and tobacco. Therefore from 13 March 2017, the duty rates on beer, cider, wine and spirits will increase by RPI inflation. As announced at Budget 2014, duty rates on all tobacco products will increase by 2% above RPI inflation. This change will come into effect from 6pm on 8 March 2017.
The final rates for the soft drinks levy have been set at 18 pence per litre for the main rate and 24 pence per litre for the higher band.
* Childcare
The tax-free childcare policy will be introduced in April 2017 and will allow families across the UK to receive up to £2,000 a year towards the cost of childcare for each child under 12 years old. See help paying for childcare (link is external).
In order to help people back into employment after a career break, £5 million will be committed to promoting returnships to the public and private sector
* VAT
From 1 April 2017 the VAT registration threshold will increase from £83,000 to £85,000 and the deregistration threshold from £81,000 to £83,000. See registering for VAT.
Unincorporated businesses and landlords with turnover below the VAT threshold will have until April 2019 before digital record keeping and quarterly updates become mandatory. Those with annual turnover above the VAT threshold will still be required to keep digital records and send HMRC quarterly updates from April 2018.
FSB SayTax Burden On Self-Employed Is Wrong Way To Go
Responding to the final Spring Budget announced by Chancellor of the Exchequer Philip Hammond MP earlier today, FSB Policy Chair for Northern Ireland, Wilfred Mitchell said: “The National Insurance increase for the self-employed to 10% next year and 11% in 2019 should be seen for what it is – a £1 billion tax hike on those who set themselves up in business. Approximately 125,000 people in Northern Ireland were self-employed as of December 2016, so FSB is very disappointed at the announcement of an additional tax burden on them; it is simply the wrong way to go, as we try to encourage entrepreneurship.
“This undermines the Government’s own mission for the UK to be the best place to start and grow a business, and it drives up the cost of doing business. It puts future growth of the UK’s 4.8 million-strong self-employed population at risk.
“On a more positive note, Mr Hammond announced specifically that he would take forward FSB’s proposals to help the self-employed in the benefits system and we look forward to working with him on what this may mean for maternity benefits and paternity leave.”
* Additional funds
Mr Mitchell noted: “FSB welcomes the additional funding of approximately £120 million to the incoming Northern Ireland Executive, however, it highlights the pressing need for our MLAs, currently involved in negotiations, to work together and focus on bringing about political and economic stability so that these additional funds can be accessed and invested locally to provide services and stimulate growth.”
* Business Rates
One of the primary issues relevant to small businesses in today’s budget was business rates, however the reliefs and revaluations announced by the Chancellor are not applicable to local small businesses, as Northern Ireland has a different system of rates than the rest of the UK. The NI Assembly is yet to strike a rate and confirm the former Finance Minister’s commitment to extend Small Business Rates Relief here for a further year, but today’s announcement underscores the pressure that rates put on small businesses right across the UK and why they need to be reformed.
SDLP MP’s respond to Spring Budget 2017
SDLP MP’s, Mark Durkan, Alasdair McDonnell and Margaret Ritchie have responded to the Spring Budget 2017, expressing disappointment at the Chancellor’s failure to take full account of Northern Ireland’s requirements and the serious challenges Brexit creates.
Alasdair McDonnell said: “The Chancellor’s Budget today will give little comfort to those in Northern Ireland who were hoping for the much needed funding for our health service and education system. The additional funds announced will be easily absorbed by existing budgetary pressures.
“The Chancellor made no indication that he understands the serious challenge that Brexit poses to Northern Ireland. If he is accumulating a war chest for Brexit, he must make clear how much of that will be available to Northern Ireland.”
Margaret Ritchie added: “The Chancellor paid lip service to International Women’s Day but yet made no mention of the Waspi (Women against state pension inequality) campaign, despite thousands of women marching on Parliament to call for a fair pension settlement. There was not even a window of consideration given to these women.
“The SDLP proudly supports the Waspi campaign and that of the Forgotten 14 in Northern Ireland and will continue to pursue the government on this matter. Moreover, the changes to National Insurance contributions from the self-employed need to be studied carefully to ensure small business owners are not unfairly penalised.”
Mark Durkan also said: “We have already seen the implementation of English votes for English laws, it now seems that we are moving into the realms of English budgets. There was little mention of Northern Ireland in this Budget but there are many implications in it of which we must be vigilant, not least in the area of welfare.
“Despite claiming that there would be no further welfare cuts, the past few weeks have seen cuts to Employment and Support Allowance and to Housing Benefit for 18-21 year olds. If the Chancellor has a more money that he is holding in contingency, then he did not need to sustain the welfare cuts announced last year or to make further cuts.
“The SDLP has also made representations on the bereavement benefits and have lobbied the government to extend the DLA Mobility support to children under-threes with life-limiting or life-threatening conditions.”
NIIRTA Comment On Budget
The Northern Ireland Independent Retail Trade Association (NIIRTA) has described today’s budget as disappointing with little in it for the local retail sector.
NIIRTA Chief Executive Glyn Roberts said: “It is to be welcomed that an incoming NI Executive is to receive an extra £115 million and indeed that fuel duty has been frozen again.
“Given that 99% of all business in Northern Ireland is small, increasing national insurance payments for many self-employed people is a retrograde step and will increase the tax burden for many local entrepreneurs.
* On the Government’s Making Tax Digital Plans: “The threshold for businesses to qualify for an additional year before they have to report their accounts quarterly has been set far too low at £83,000 turnover, and is irrelevant to many of our members.
“Retailers to be given more time to adapt their software and in-store procedures to comply with the regulations, and sadly only the very smallest businesses will be given this additional time. Further support is needed from the government to support the smallest retailers to comply with the regulations.
* On the reduction in the tax allowance for dividend payments to owner-directors of small businesses incorporated as limited companies, from £5,000 to £2,000: “Having been encouraged to become limited companies, the rules are again being changed so that these small business owners have to pay more tax on their often small profits. NIIRTA members work among the longest hours of any sector in the economy, and the further tax burden on these businesses is unfair.”
Tobacco tax hike welcomed by cancer charity
Cancer Focus Northern Ireland today welcomed the Chancellor’s decision to introduce a Minimum Excise Tax on cigarettes, based on a packed price of £7.35, but said that even higher taxes were needed.
The Chancellor has also continued the tobacco tax escalator, which means a tax rise of 2% above inflation for all tobacco products.
Gerry McElwee, Head of Cancer Prevention at Cancer Focus NI, said: “Tax increases are effective in reducing tobacco consumption, so we are delighted.
“We’re also pleased that the Chancellor has ignored the self-serving calls from the tobacco industry and its front groups to drop the tobacco tax escalator, and that he has introduced a Minimum Excise Tax on cigarettes.
“But we really wanted to see sharper tax rises on all tobacco products, and in particular a larger rise on tax on hand rolled tobacco. The danger is that smokers on lower incomes may shift from cigarettes to hand rolled tobacco in even greater numbers than before.”
