Business Debtline – December 2016

What have NI businesses to look forward to after a turbulent 2016?
So as we say goodbye to 2016 which will forever be remembered for Brexit and Trump, what do Northern Ireland business owners have to look forward to in 2017 and beyond? With economic uncertainty in Northern Ireland still high following another turbulent year in the UK and a falling pound rate, we take a look at three factors which could make a significant difference to the local economy going forward.

Business Rate Changes

Firstly, the Finance minister has recently announced another review of the business rating system in Northern Ireland. As with all announcements of this kind, there are potential winners and losers. The new review proposes changes including replacing the small business rate relief scheme with a new £22 million fund for small retail and hospitality sectors. The proposed scheme is to run for three years and offer up to 40% support to around 13,000 businesses, including businesses in provincial town centres that previously missed out. It will mean that any business with a Net Annual Value (NAV) of less than £10,000 will only pay 50 per cent rates while businesses right up to £25,000 NAV will get significant support. However, some 10,000 properties, such as offices in town centres above retail premises, will not be eligible for relief.

Also proposed are two pilot schemes to regenerate deprived areas of east and west Belfast, the so-called “Business Empowerment Zones” will be in the lower Newtownards and lower Falls Roads and will provide specific rates relief to encourage further investment in these areas. If successful, similar schemes may be trialled in rural areas.

Vacant commercial properties rates are also up for a major change, with proposals to change the levy from 50% reduction to only 25% reduction, in an attempt to encourage the letting of empty premises and increase economic activity, particularly in rural town centres.

However, the most controversial measure in the review of the business rating system is the reduction in the support for charities which may now be charged up to 20% of the full rate amount. This could create serious concerns for charities with multiple offices or retail units and will impose a further financial burden to the already struggling public and charitable sectors.

Impending NI Corporation Tax Changes

The corporation tax rate is due to decease to from 20% to 12.5% from April 2018, to attract more foreign investment and compete with the Republic of Ireland’s rate which is also 12.5%. However, the UK autumn statement introduced plans for the UK to cut its rate also in the light of the Brexit vote to 17% from April 2020. From Northern Ireland’s prospective every cut to UK corporation tax erodes the expected benefit of reducing our own rate, however that said it does reduce the cost of implementing it here as Stormont will have to repay the Treasury for the loss of tax revenue the reduction in corporation tax brings. Therefore, if the UK announces any further cuts to corporation tax, Northern Ireland will need to rethink their options and propose a Plan B, or continue as the region with the lowest foreign investment in the UK.

Brexit

What is going to happen? When? The uncertainty around Brexit rumbles on, and with Northern Ireland the only part of the UK sharing a border with an EU member, we are likely to see the largest impact in our lives and to our businesses. The economic transformation brought by the peace process of border communities such as Newry, Enniskillen and Londonderry is are very much at risk because of the Brexit vote. Potential trading tariffs and restrictions on movement of workers will greatly affect the border areas, and the drop in sterling in the wake of the Brexit vote has delivered a “windfall” for border retailers, but this will only continue if shoppers from the Republic can continue to cross the border without restriction.

There are also concerns within the Agriculture business community as the EU contributes £250 million a year to Northern Ireland farmers. With no post-Brexit strategy, and no reassurances that a domestic agricultural policy will replace this funding, many in this sector face an uncertain future.

Therefore, as we enter 2017, all we can summarise is that the future for Northern Ireland business remains uncertain and we are facing some of the most important challenges ever faced in Northern Ireland.

Advice NI currently manages the Northern Ireland Business Debtline service, which is a free telephone service offering tailored, independent and impartial advice for sole traders, partnerships and Limited Companies. Factsheets are accessible online and cover all aspects of business insolvency issues.

If you or anyone you know could use the Business Debtline service contact Mark Baird, by phoning the Freephone 0800 0838 018, which is open 9am-5pm Monday to Friday, or email bdl@adviceni.net.