• Mini Budget 2022: BDO NI response

Mini Budget 2022: BDO NI response

23 September 2022

Response to the Mini Budget 2022 by Tax Partner, Maybeth Shaw.

“The flurry of announcements by the UK Government in recent days indicates this is a new administration in a hurry to try and stimulate the economy. Time will tell whether or not it works, but everyone will no doubt welcome the scrapping of the National Insurance increases whilst businesses trading through companies will welcome the reversal of the planned increase in Corporation Tax. The similar reversal on the planned increase in duty for beer, cider and wine will also be welcome to many businesses here.

The Chancellor has ambitions of achieving a rate of growth of 2.5% through a raft of tax cuts, incentives and reforms with the ultimate outcome of making the economy more competitive.  Whether or not his plans announced so far stimulate the economy enough to encourage growth in the current economic environment remains to be seen.

“Whilst on paper these initial cuts, along with the capping of the energy price increases and support being provided to businesses, could certainly help in the short-term, the question lies in just how much more we will pay in the long run as a result of these measures.

“An interesting announcement comes in the form of new investment zones, of which 40 areas have been initially identified, essentially facilitating the relaxation of planning rules, reducing business taxes and other red tape across areas in the UK with the aim of encouraging investment.

“Whilst the Chancellor did confirm the UK Government would work to make sure that Scotland, Wales, and Northern Ireland will also benefit “if they are willing to do so”, how this would work logistically with much of our local planning and other powers devolved to local councils, not to mention who would make the decision on what areas in NI will be allocated this ‘investment incentive’, remains to be seen.

“The cut in stamp duty for England and Northern Ireland, meaning 0% will be paid for up to a £250K purchase, will be very welcome to both individual purchasers and the construction sector and will ultimately include the majority of those purchasing properties in Northern Ireland.

“The decision to scrap the additional rate of income tax will benefit those in a higher earnings bracket, with the UK government likely arguing that it will encourage further growth in the economy through higher taxpayers coming to the UK.   

“As ever, the devil will be in the detail as we assess the long-term impact for Northern Ireland and, whilst a number of these announcements could have a positive impact on businesses and employees locally, the proof of the pudding will be in how these ultimately roll out.”