The Chancellor giveth but warns that he will take away…
As Chancellor Rishi Sunak made clear at the outset, the United Kingdom hasn’t faced such a mountain of debt since the end of World War Two and that guaranteed that his Budget was one of the most anticipated in modern British history.
How the country repays that debt is something Mr Sunak did not shy away from but, from the outset, he made it clear that it was essential to lay the foundations of recovery and growth before the take-back begins with a corporation tax rise in two years’ time. In the meantime, the package he has laid out seems as positive as could have been hoped for.
While the corporation tax rise goes against years of careful work and campaigning for a meaningful reduction in levels in Northern Ireland – though the Executive has declined to use its powers to do so - now does not seem to be the time to complain given the wider picture.
In any case, the key takeaway here is that the current 19% rate will continue to apply to firms with profits of less than £50,000 which is good news for many of our smaller SMEs and micro-businesses. He also confirmed a taper above that £50,000 figure, meaning that only firms with profits of £250,000 or more will pay tax at the full 25% rate. This, again, is good news across and for the region as a whole.
Across the board, the Chancellor confirmed extensions to business and household support schemes through to September of this year, including new assistance for more among the self-employed. The furlough scheme will require greater input from employers paying 10% of wage contributions in July, rising to 20% of wage contributions in August and September as the scheme draws to a close. There was also a boost for the apprentice scheme which rises to £3,000 for each new trainee brought on by firms as the economy opens up again and business rates and VAT levels will also remain on hold in an effort to give business as much room as possible for growth.
In Northern Ireland in particular, where so much of the economy is based on small businesses, the announced incentives to help management development and digital growth, for example, offer a real opportunity for the regions energetic and ambitious companies.
The ‘super deduction’ of up to 130% on investment offers a similar boost both to the firm making the purchase and, hopefully, to many of the firms in our innovative and adaptive manufacturing sector. The Chancellor revealed his plans against official predictions of 4% growth this year, followed by a 7.3% surge during 2022.
But Mr Sunak warned that it would still take the efforts of many future governments to rebuild the country and leave it fit and able for any future crisis. Even so, while the announced corporation tax changes and income tax threshold freezes are set to net £17bn and £8bn respectively in due course, he said that he was staying true to the Conservative manifesto to leave VAT, income tax and national insurance alone.
Running alongside the budget, of course, there is the progress of the both the Belfast and Derry/Londonderry city deals and also the announced plans to work with the Executive to develop the freeport programme that saw eight areas in England gain special status to encourage investment and growth in less advantaged regions.
Independently of the Chancellor’s plans, Budget day also saw the Government announce that it is to extend grace periods for Irish Sea border checks under the protocol established as part of Brexit. In the immediate future, the out-workings of the Protocol remain to be seen but, in the short to medium term, the future looks encouraging at the least for a region with our track record of entrepreneurial flair and hunger for growth.
Read BDO's full analysis fo the Budget by clicking the link below.