Overview

This bill establishes a distinct corporation tax rate for Northern Ireland, allowing the Northern Ireland Assembly to set a rate different from the main UK rate. The bill also includes provisions for how this new rate will interact with various tax reliefs and allowances, aiming to ensure a fair and efficient system.

Description

The Corporation Tax (Northern Ireland) Bill introduces a Northern Ireland corporation tax rate, determined either by a resolution of the Northern Ireland Assembly (subject to cross-community support and a recommendation by the Minister of Finance and Personnel), or defaulting to the main UK rate. The bill meticulously details how this rate applies to different types of companies (SMEs and larger corporations) and their various business activities.

It outlines rules for calculating a company's "Northern Ireland profits" and "mainstream profits" and how this affects loss relief and capital allowances. The bill significantly addresses how the Northern Ireland rate interacts with existing tax reliefs, including research and development expenditure, remediation of contaminated land, film and television production tax reliefs, video game development tax relief, theatrical productions tax relief, and profits from patent exploitation, with specific provisions for SMEs and larger companies.

The bill also provides for adjustments to capital allowances, to ensure consistency with the new Northern Ireland rate. The calculation of allowances and charges related to the new rate are detailed. Transitional provisions are included to handle companies' accounting periods that span the commencement date. The bill also grants powers to the Treasury and the Commissioners for Her Majesty's Revenue and Customs to make further consequential amendments and regulations.

Government Spending

The bill's impact on UK government spending isn't directly stated with numerical figures. However, a lower corporation tax rate in Northern Ireland could potentially reduce tax revenue collected by the UK government, while a higher rate could increase it. The actual effect depends entirely on the rate set by the Northern Ireland Assembly and the economic activity in Northern Ireland.

Groups Affected

• Companies in Northern Ireland: This bill directly affects all companies operating in Northern Ireland, potentially influencing their tax liabilities depending on the rate set and their classification as SME or larger corporation.
• The Northern Ireland Assembly: The Assembly gains the power to set the corporation tax rate for Northern Ireland, influencing the economic environment and competitiveness of the region.
• HM Revenue & Customs (HMRC): HMRC will be responsible for implementing and administering the new tax regime, requiring adjustments to their systems and processes.
• Investors in Northern Ireland: The new tax rate could influence investment decisions in Northern Ireland, potentially attracting more investment if the rate is lower than the UK main rate.
• UK Treasury: The Treasury's tax revenue will be impacted depending on the level of corporation tax in Northern Ireland in relation to the UK main rate.

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