Some elements of a UK budget aimed mostly at voters should boost parts of Northern Ireland’s economy, according to one of the region’s leading business figures.
Chancellor of the exchequer Jeremy Hunt announced cuts to social insurance, VAT and other tax changes in what observers said was a bid by the UK’s governing Conservative party to woo voters in advance of an election this year.
Lorraine Nelson, tax partner at BDO Northern Ireland, calculated that a cut in national insurance should save the average worker around £900 (€1.050) a year.
“The budget was very much aimed at the individual taxpayer coming up to the elections,” she said.
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Ms Nelson said that a cut in residential property capital gains tax to 24 per cent from 28 per cent should hopefully help open up the North’s housing market.
Alongside that, new rules limiting tax reliefs for people letting short-term properties to tourists could also help free up those homes, she suggested.
Businesses such as tradespeople should benefit from a pledge to raise the VAT threshold to £90,000 a year turnover from £85,000. “That probably will help a lot of smaller, local businesses,” said Ms Nelson.
Tax breaks for people investing part of their Individual Savings Accounts – a state scheme to encourage people to husband their cash – in UK business could potentially aid the local economy, she noted. Ms Nelson acknowledged that the move was likely to be a “post-Brexit play” to encourage people to put money back into the economy.
Over the longer term, she predicted that many families would welcome news of an increase to the income limit for state child benefit payments to £60,000 a year from £50,000. That comes as the UK government plans to overhaul the system for the benefit, which currently creates anomalies, as it is tied to individual income rather than household income.
Ms Nelson explained that, under the current system, a couple each earning £49,000 a year could quality for the payment, while a single person on £51,000 could be excluded. The government intends changing the system to take household earnings into account.
Meanwhile, she suggested that a proposed review of UK tax residency rules could have ramifications for people on either side of the Border, depending on what the UK government ultimately proposed.
