05/11/2024

The Labour Government’s Autumn’s Budget Autumn’s Budget  has met with mixed responses.  Tax is not one of the areas that is devolved to the Northern Ireland Assembly and The Executive so the increases in taxation will apply here.

[Note however Northern Ireland does have responsibility for local taxes (domestic and business rates). In March 2015 Parliament passed the Corporation Tax (Northern Ireland) Act 2015 which, subject to commencement regulations, will devolve corporation tax rate setting powers to the Northern Ireland Assembly. The Government has committed to commencing the regime if the NI Executive demonstrates its finances are on a sustainable footing.]

THE TAX RISES IN THE BUDGET THAT WILL AFFECT BUSINESSES INCLUDE:

Employers National Insurance Contributions (NIC)
This is a rise of 1.2% rise from 13.8% to 15% to only the Employers element of National Insurance Contributions. The threshold at which payments start will also fall to £5,000 from £9,100 meaning that businesses will have to start paying NIC on a larger portion of their employees’ salaries.

To soften the impact on small businesses, in April 2025 Employment Allowance will increase to £10,500 (from £5,000), providing some protection to the smallest businesses.

Income Tax

The Budget confirmed that Income Tax and National Insurance Contributions thresholds will continue to be frozen and only unfrozen from 2028-29 onwards.

National Living Wage
Prior to the Budget the Government confirmed that from April 2025 the National Living Wage for those aged 21 and over would increase to £12.21, representing a 6.7% increase of 77p.

National Minimum Wage

In addition the Government also confirmed that they would fully accept the Low Pay Commission’s (LPC) recommendations on the rates of the National Minimum Wage (NMW), including the National Living Wage (NLW). For the first time, the Government asked the LPC to take into account the cost of living, including expected trends in inflation up to March 2026, when recommending the NLW. The LPC expects its recommended rate to represent a real-terms increase across the whole of the period to March 2026, using any major inflation measure, thereby protecting low-paid workers’ living standards.

• 18-20 years old from £8.60 to £10.00 (increase of 16.3%)
• 16-17 years old from £6.40 to £7.55 (an increase of 18.0%)
• Apprentice rate from £6.40 to £7.55 (increase of 18.0%)

Corporation Tax

This will be capped at 25% for next 5 years and small business tax multiplier froze.

Capital Gains Tax (CGT)
Effective immediately, CGT charged on profit made from the sale of assets, will increase with the lower rate rising from 10% to 18%, and the higher rate from 20% to 24%.

Fuel Duty
Fuel duty will be froze for another year with the temporary 5p cut extended to 22 March 2026.

Company Car Tax Incentives for electric vehicles.

Impact
The investment projects in England proposed to boost the economy do not apply here. Instead Northern Ireland receives additional funding via the Barnett formula and NI Executive then decides on how to spend that money.

This additional funding amounts to £1.5 billion in 2025-26:

• £1.2bn for day-to-day spending and;
• £270m for capital expenditure i.e. infrastructure investment.

Statistics for March 2024 show that the majority (89% or 71,425) of businesses in Northern Ireland are micro-sized businesses (less than 10 employees). These tax measures will affect all businesses especially with the higher minimum wage and changes afoot on employment rights.

See Press Release: A Budget to fix the foundations and deliver change for Northern Ireland