Tax policies of biggest local parties

Ahead of the UK’s general election on Thursday 4 July, we take a look at the tax policies of the two largest parties in Northern Ireland. 

The DUP’s tax policies and promises 

The Democratic Unionist Party (DUP) published its full manifesto last week. The party continues to argue that further work is needed on the Windsor Framework and “we will continue to argue the case for the full primacy of the United Kingdom internal market, and we will continue to reject the undermining of its integrity………..In October, as part of the NI Assembly vote on the current arrangements, we will not hesitate to vote against their continued application and, drawing upon the new mechanisms at our disposal, we will continue our quest through the inbuilt review.” 

A lower rate of corporation tax for Northern Ireland also featured, something which the Institute has been campaigning on for many years. The Institute is currently developing a briefing paper on the benefits, challenges, and potential mitigations to any challenges of a lower rate of corporation tax for Northern Ireland which it plans to use as a mechanism to drive this issue forward.  

The DUP’s analysis of a lower rate of corporation tax for Northern Ireland features on page 29 of their manifesto and reads as follows: 

“Lowering the rate of corporation tax in Northern Ireland has been a longstanding DUP policy. This would boost Northern Ireland as an attractive investment opportunity, building on the strength, skill and ingenuity of our workforce. The minimum effective 15% rate in the Irish Republic places firms in Northern Ireland at a competitive disadvantage and we want to see this addressed. We continue to advocate for a reduction in corporate tax across the United Kingdom and DUP MPs opposed the increase in the main UK corporation tax rate from 19% to 25% in 2023.  

The DUP believes there are a number of fundamental issues that require resolution with the Treasury before the powers to vary corporation tax rates - which are already provided for in law - can be enacted. We are clear that progress must be based on solid foundations. That means ensuring a process of implementation that protects spending on public services in the short to medium-term.” 

DUP MPs will also campaign to:  

• Oppose the freeze on the personal tax allowance and higher rate income tax threshold 

• Seek further reductions in national insurance 

• Support an increase in the starting age for employee national insurance 

• Encourage the government to explore the merits of moving to single tax on all income, replacing income tax and national insurance 

• Freeze vehicle excise duty 

• Abolish VAT on domestic electricity bills 

• Maintain the freeze on fuel duty 

• Oppose any increase in insurance premium tax  

• Increase the tax-free childcare allowance from 20 percent to 35 percent 

• Remove the cap on tax free childcare above £2,000 

• Scrap VAT on school uniforms 

• Support the triple lock on state pensions  

• Support the personal allowance for pensioners always being above the amount of the state pension 

• Increase the VAT registration threshold for SMEs to £100,000 and then uprate it in line with inflation 

• Drive up the number of SMEs benefiting from tax reliefs 

• Ensure the national insurance liability for small businesses is fair: the Employment Allowance should be uprated in line with increases to the national living wage 

• Promote greater awareness of capital allowances and R&D tax reliefs among local businesses 

• Explore the potential introduction of an online sales tax targeting online corporates and marketplaces 

• Support robust efforts to crack down on global tax evading corporations 

• Aim for the VAT system to be better utilised to incentivise investments that promote improved productivity through low-carbon and green technologies 

• Continue to campaign for a reduction in VAT for hospitality across the UK, and  

• Expand UK research & development tax relief for small and medium sized enterprises to include capital expenditure. 

In its 2022 Assembly Election manifesto, the DUP also argued that the necessary capacity did not exist for Northern Ireland to devolve additional fiscal powers. That remains its position at this time.