Northern Ireland’s tourist businesses, pensioners and landlords will bear the brunt of British chancellor of the exchequer Rachel Reeves’s budget, initial reaction on Wednesday predicted.
Ms Reeves’s plan to boost air passenger duty prompted Belfast International Airport chief executive Dan Owens to call on the Northern Ireland Executive to cut the travel tax.
“This is an additional tax on travel that the Irish Republic does not have, and therefore it makes Northern Ireland less attractive to airlines considering introducing new routes,” he said.
“This is a harmful tax that suffocates economic growth.”
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Colin Neill, chief executive of industry group Hospitality Ulster, warned that the sector would continue to face pressure as a result of the chancellor’s failure to act on either VAT or business rates.
He called on the British government to introduce a five-year VAT pilot in Northern Ireland to allow businesses to compete with the special hospitality VAT rate that will be introduced in the Republic next year.
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“This would support job retention, regeneration, and regional fairness, giving many operators the breathing space they need simply to survive before competitive forces naturally pass savings on to consumers,” said Mr Neill.
He added that frozen tax allowance thresholds would hit spending in the North.
Lorraine Nelson, tax specialist with BDO Northern Ireland, highlighted that the frozen allowances could hit pensioners in 2027.
Ms Reeves froze the personal allowance at €12,570 a year until 2031. Cost-of-living increases to the UK state pension will lift the payment beyond this benchmark in 2027, Ms Nelson predicted.
“It means pensioners will start to pay tax from 2027,” she said.
Ms Nelson warned that a tax on rental income could hit landlords. “It looks like they are really trying to push landlords out of the market,” she noted.
Another measure introducing capital gains tax for anyone selling a business to employees’ trusts could cut off a potential way for investors in start-ups or early-stage companies to cash in, she noted.
Ms Nelson observed that the chancellor had stalled implementation of many measures announced until later in the decade and closer to the likely date of the next general election in the UK.
