Autumn Statement 2016: Devolution of taxes
- Publish date: 26 October 2016
- Archived on: 01 January 2019
ICAEW Tax Faculty provides analysis of the announcements relating to the devolution of taxes within the UK in the 2016 Autumn Statement.
It is expected that from April 2018 the Northern Ireland government will lower the corporation tax rate there to 12.5%, the same as the Republic of Ireland, provided that the Northern Ireland Executive demonstrates its finances are on a sustainable footing.
The Northern Ireland corporation tax regime will be amended in the FB 2017 to give all SMEs trading in Northern Ireland the potential to benefit from the proposed 12.5%, corporation tax rate. Currently, SMEs will only qualify for the 12.5% rate if 75% or more of employee time and costs are incurred in Northern Ireland. This change would appear to widen the scope considerably and put all SMEs on a level playing field – it is not clear whether the 75% test will still be retained as it would no longer appear to be necessary. We presume that this change will be permitted under EU state aid rules – at least while the UK still remains a member of the EU.
Inheritance tax and political parties
As noted under ‘Personal and employment taxes’ above, the IHT exemption for gifts made to qualifying political parties will be extended to parties with representatives in the devolved legislatures.