Additional Stormont Funding Welcomed In Budget But Businesses Unhappy With National Insurance Tax Rate Hike

The first Budget of the new Labour government certainly left us all with plenty of talking points. They had been signalling that they had to raise money to balance the books, after they found what they called an alarming black hole in the public finances left by the previous incumbents.

Whether the move to raise the rate of employers national insurance contributions will prove to be a wise move or not remains to be seen, but it has certainly set the alarm bells ringing for many businesses in Northern Ireland. One aspect of the Budget that has been broadly welcomed has been the announcement of £1.5 billion extra funding for the Stormont Executive to help fund public services.

Alarming Tax Burden On Businesses Deeply Concerning

Below are three views from prominent people in NI on how the budget will affect the country, as copied from an article on the Business Eye website:

Firstly Northern Ireland Chamber of Commerce CEO Suzanne Wylie commented:

“While businesses acknowledge the need to stabilise public finances and support investment in public services, the alarming acceleration of the tax burden on businesses is deeply concerning. In the absence of material growth, this will add to already high business costs and is likely to impact confidence and investment intentions,” said Suzanne.

“For businesses in Northern Ireland, there are further unknowns. While the additional £1.5 billion in funding for the region is welcome, we need the NI Executive to move promptly to publish its draft budget so that we can start delivering greater certainty for people and businesses here too.”

Many Employers Will Be Dismayed By The Budget

Alan Gourley, Partner at Grant Thornton’s Belfast office, took a similar line. “Many employers throughout Northern Ireland will be dismayed by the Autumn Budget, with the increase in the rate of employers’ National Insurance, the reduction in the threshold to which the rate applies, and the increase in the national living wage set to significantly hit the bottom line for a lot of companies,” he said.

“Perhaps even more alarming, however, is the seismic impact that the changes to inheritance tax will have on a lot of family businesses. Indeed, Northern Ireland has such a strong culture of retaining companies within the family that these changes will affect this region more than most.

“The tweaks to a few lesser-known rules, such as the reform of both business relief and the ability to pass on agricultural land tax-free, mean businesses need to deal with a major extra exposure to tax.”

Eamonn Donaghy, Tax Partner and Executive Chairman at HNH, adopted a balanced view.

“The Chancellor described the Government’s mission as being to grow the economy, and announced an array of other spending measures with that in mind. It is to be hoped that the tax measures announced, while admittedly painful, will not discourage entrepreneurs from playing their part.”

It is good news for everyone that this Labour government is making moves to shore up and fund our public services, but whether the best way to raise revenues is to increase the national insurance tax rate for employers is going to be a talking point that is going to run and run.