21 minute read
Maybeth Shaw
Columnist
Maybeth Shaw
BDO NI Tax Partner
A Very Taxing Time For Business
The dawn of the new financial year brought with it several tax changes which will impact both our personal and business finances. Whilst a number of these changes were announced during the recent Spring Statement, others have been in the pipeline for considerably longer.
If we think about how much the world had changed since the Chancellor announced his budget back in October 2021, with the significant rise in the cost-of-living crisis coupled with inflation at a 30-year high and ongoing global pressures, we could be forgiven for questioning if there is any light at the end of the tunnel.
In September 2021, the UK Government introduced a new 1.25% Health and Social Care Levy which came into operation in April this year. This will initially be part of National Insurance contributions but will be ring-fenced for health and social care and from 2023 will apply as a separate levy.
The UK Government will work with the new NI Executive (if and when one is in place) to identify areas where the new funding should be applied locally.
The commitment to reduce income tax by April 2024 and to increase the National Insurance threshold by £3,000 from July were two of the key takeaways from the Chancellor’s Spring Statement.
With the increases in National Insurance contributions in place, it is only taxpayers on lower incomes who will benefit from the headline £300-per-year saving from the subsequent increasing of the National Insurance threshold to £12,570. Nevertheless, working on the basis that more disposable income benefits local businesses, this too could be very positive. This should, however, be heavily caveated with the fact that this £300 extra could well be swallowed up by the ever-increasing costs faced by households.
The planned 1% cut in income tax, whilst a welcome announcement, will seem a very long way off to many.
The reduction of fuel duty by 5p per litre for a period of one year was a welcome addition, however, the difference it will make to those businesses and indeed households that have been badly hit by spiralling fuel increases could be minimal.
Other indirect tax changes will surely have an impact on local business and their investment and operational plans for 2022 and beyond.
The temporary reduction in the VAT rate for the hospitality sector to 5% initially, followed by 12.5% in October 2021, returned to the 20% status quo from April this year. The end of this support mechanism, which was seen to be a ‘lifeline’ for many within hospitality in NI, will no doubt have knock-on effects on their cashflow.
The removal of the rebate on red diesel (5% VAT) will have substantial implications across a range of industries, including manufacturing, construction, logistics and waste management. With the rebate only staying in place for a very limited number of industry sectors, switching to a higher cost of fuel will have significant financial implications for businesses. With the continued rise in global commodity prices, it is surely not a time to cut such an important VAT exemption for businesses already feeling the impact of growing business costs.
Looking further down the line, businesses posting profits of over £250k will, from April 2023, see an increase in corporation tax to 25%.
In the Autumn Budget we will be expecting to see movement on investment and innovation with reform of R&D relief to help boost productivity. The government may also revisit the idea of regional variations in R&D relief within the UK as part of its wider levelling-up agenda.
As we see a range of tax changes applied this year alongside the ending of some vital Covid-19 support packages, time will tell how this will impact the future of many within the business community.
An Infinite Journey
Galgorm Collection used the pandemic to invest in its portfolio of venues and Colin Johnston, managing director, tells Emma Deighan that bigger plans are always in the pipeline for the growing hospitality empire.
Challenges are rife for the hospitality sector here. Those hurdles aren’t just about recouping losses made during the pandemic, but doing so against a backdrop of surging energy, food and labour costs as well as a cash-strapped consumer.
But there’s an air of positivity in the sector, one of its largest hoteliers says.
“We’re now in a period of dealing with a lot of pent-up demand,” Colin begins. “International travel is starting to come back, which is great, but it’s now about making the model work with those rising costs.
“From a business point of view, I see the next year or two being challenging for the industry but while we can’t predict the future, it is important to remain positive and when I look around, it is encouraging to see how adaptable and resilient the industry is with an air of optimism. As ravaging as the pandemic was, a lot of it is now behind us and it sped up a lot of change and innovation.”
Lockdowns and forced closures marked something of a transformational period for Galgorm Collection.
At its flagship site, Galgorm, the company is in the throes of a £30m investment, which it will undertake over the next five years.
Part of the first phase is a £10m new accommodation offering along with plans to further expand and enhance its thermal spa facilities. Galgorm launched a range of bespoke one-bed Shepherd’s Huts representing an investment of £2.5m recently, with a further 18 Shepherd’s Huts planned for this year. A further £2.5m spend will make way for 23 additional onebed cottages while plans are also in place to add five treetop hideaways set amidst the forest grounds worth £1.5m.
“We are fortunate that Galgorm is situated on a 380-acre estate which gives us the opportunity to further develop our experiences. We have a new cycle trail that travels down the River Maine and the new mix of accommodation, as well as developing a wide range of pursuits. We need to add to the infrastructure as the property grows,” Colin continues.
In Templepatrick, the company’s recently opened The Rabbit Hotel & Retreat, formerly the Templeton Hotel, injects a touch of quirkiness into the market.
The £10m refurb there gave way to a 33-bed boutique hotel and lakeside spa with an onsite restaurant, bar and private event space.
“It’s been very well received,” Colin says. “The vision behind the site was to create a laid-back little sister to Galgorm.
“We’d seen some diversification in the market including a move towards quirky venues for weddings but often that means piecing the event together yourself, so we put that setting in a hotel environment. It was about an evolution of the Galgorm product.”
Later this year a dedicated space for ceremonies will launch at The Rabbit Hotel & Retreat, while additional bedrooms and a fitness suite will come on board.
In Co. Down, The Old Inn, Crawfordsburn, which the Collection acquired in mid-2021, has undergone a £1m refurb. It has opened up a new market for the Collection, Colin admits.
“The Old Inn is at the start of its journey. We will add a spa this autumn which will be resident-only overlooking Crawfordsburn Country Park.
“It’s a fantastic venue and really appeals to the international market with 6% already from America since opening. I think it’s the look and feel of the property – The Old Inn is one of the region’s most historic and appealing hotels, located in a unique and charming location which makes it a perfect fit.
“It’s a fantastic new opportunity for us, and we’re seeing a lot of guests from the Belfast area and the Republic of Ireland who may not want to have to travel those extra miles to Ballymena.”
In Belfast the company has reopened Fratelli restaurant on Great Victoria Street and Parisien based in the Robinson Cleaver building. They both remained closed for the entirety of the pandemic and prior to reopening, Fratelli received an extensive revamp.
Colin reflects on the latter investments as something that was afforded by the pandemic, a positive for the Collection, getting it ready for the great relaunch of society, but he says during that period, the most important element of the business was supporting and sustaining the team.
“Our team was the first thing we thought about when the pandemic hit. We felt we needed to invest and look at new and additional ways to engage from the early days onwards.
“We issued an employee survey to determine any initiatives that our teams would find helpful and how we could support them”. The findings highlighted that employees would benefit from a counselling service and to support this the company launched an Employee Assistance Programme.
“The thing about hospitality workers is, they’re such sociable people and there is always interaction in this job. That was taken away and it was important to us to support them,” he continues.
The company introduced a £1m benefits package for all eligible team members, including premium private healthcare cover during that same period. It also runs a number of academies with other hotels in Ballymena and alongside the local college and council.
Colin says the latter initiatives, as well as supporting local businesses, charities, community and sports groups within its confines, “help encourage people into the industry”.
“We upskill our employees and we want to show them that there is a career journey here,” he adds.
Galgorm’s CSR efforts have grown in line with the Collection properties. It’s a moral obligation, Colin says.
Comfy Guestroom at The Rabbit
Vitality Pool.
Shepherd’s Huts at Galgorm.
Cafe Parisien.
“As a local company and family company we’re always embedded in the area.
“Galgorm now employs 650 people in Ballymena alone and naturally that comes with a responsibility.
“We put a lot into local schools and community groups. We rely on those people to work for us, visit us, celebrate family occasions with us and no company in my mind, especially a company in hospitality, can be an island. You must work with the community.”
That mantra expands into other areas too including sustainability. Its CO2 agenda is well underway with a hydro and solar project earmarked for Galgorm. This will allow it to reduce its reliance on the grid and potentially halve its electric bills there.
“I think if you’re not doing these things you’ll fi nd yourself under a lot of pressure. We want it, our team wants it and our guests want it. It’s what they expect and it’s being driven by everyone.”
The past two years have been extremely active for Galgorm Collection, even with the hatches battened down, but its growth journey is far from over. That momentum will continue in the guise of its new Ormeau Road hotel, The Raven, which may not be the last to join the Collection.
“Our ambition is to continually innovate and exceed expectations by creating world-class hospitality experiences throughout all of our properties and we will also consider other future property opportunities. That work never stops,” Colin reveals.
The spa at The Rabbit.
NOT OUT OF THE WOODS JUST YET
Gareth McGonigle.
While the local economy has thrived over the last 12 months, the number of external factors at play in spring 2022 may prove to be too much for many businesses going forward.
Many Northern Irish businesses have survived the storm of uncertainty and various lockdowns to emerge as strong, if not stronger, than this time two years ago. Government support has, undoubtedly, played a huge part in this prosperity for many businesses in Northern Ireland.
Unfortunately, as if a global pandemic was not enough for local business leaders to navigate, they now face a new economic and political landscape like never before.
Retailers, who enjoyed a post-pandemic bounce, look to be in for a diffi cult few months as consumer confi dence takes a hit with infl ation at a 30-year high. The squeeze on household income is well documented. Whilst many retailers will enjoy another rates holiday until June 2022, any benefi t will likely be offset by lower footfall, rising cost of sales, increased shipping costs and energy bills.
The recent VAT rate increase from 12.5% to 20% in the hospitality sector, at a time when input costs are rising across the board and staff shortages are apparent across the industry, is most unwelcome. Wage increases, as well as higher national insurance contributions, are not helping the sector. Staff shortages have resulted in well-known local restaurants having to reduce opening hours. These increased costs cannot be absorbed by businesses in their entirety and will invariably be passed onto consumers, but at what cost to business?
In the agri-food sector, local producers are being hit hard by soaring production costs. Fertiliser has increased from £200 per tonne in spring 2021 to £900 per tonne this spring - an increase of 350%. Red diesel has increased from 56p per litre in the spring of 2021 to £1.10 per litre this spring - an increase of 96.4%. Beef fi nishing rations have increased from £230 per tonne in spring 2021 to £310 this spring - an increase of 34.8%. The list goes on…as does the squeeze on cash reserves and margins.
This is all set in the context of a landscape where disgruntled creditors were largely hamstrung in respect of debt recovery over the last two years. HMRC, normally the aggressive type, took a passive role in the recovery of outstanding tax liabilities and actively encouraged businesses to use Time To Pay arrangements or the VAT deferral scheme; however, recent experience suggests that sentiment may be changing. The recent lifting of temporary provisions around winding up petitions expired on 31 March 2022 with the original debt threshold reverting to £750 from 1 April 2022. Although the High Court continues to deal with a backlog, it is only a matter of time before creditors in Northern Ireland will get the green light to issue winding up petitions again.
Across many sectors, businesses are experiencing mounting pressure. The quantum, and pace, of various headwinds are causing great concern to many business leaders and signifi cantly, raising the question as to whether their current enterprises remain viable. And that is without factoring in the economic impact of local political instability. My parting words – if business leaders fi nd themselves facing what may seem insurmountable challenges…seek advice, and seek it early.
Gareth McGonigle is Restructuring and Insolvency Director at ASM Chartered Accountants and is a Licensed Insolvency Practitioner. If you or your clients could benefi t from restructuring or insolvency advice, please do not hesitate to contact Gareth on 02890 249 222 or at gareth. mcgonigle@asmbelfast.com.
ASM
CHARTERED ACCOUNTANTS
4th Floor Glendinning House 6 Murray Street, Belfast BT1 6DN www.asmaccountants.com brian.tilly@asmbelfast.com
Henry Brothers: Building A Sustainable Future
Reflecting on the leading construction company’s longstanding efforts to build a greener future, Henry Brothers CSR Director Ian Henry spoke to Ambition about its sustainability journey and the drive to net zero. Earlier this year, Henry Brothers announced ambitious plans to achieve net zero carbon emissions by 2050.
It is a bold vision for the business, synonymous within the local building sector, but one that marks just the latest step on its course to improving sustainability across the industry, according to its CSR Director Ian Henry. It is less than a year since Ian, former president of Northern Ireland Chamber, passed on the chains of office.
Since June, when Ian completed his tenure, Henry Brothers has continued to move from strength to strength, not least in being named Northern Ireland’s Responsible Business of the Year at the NI Business in the Community Awards. Driven by its core values of integrity, dependability, high-quality construction, and innovation, Henry Brothers continues to work in partnership with its clients to deliver world-class projects which are not only extremely effective, but also sustainable for the future.
SUSTAINABILITY
Ian said: “It is estimated that the construction industry currently accounts for 40% of total UK emissions, and while, as an industry collective, we are making real progress, more needs to be done to ensure this figure decreases in the coming years. “At Henry Brothers, we are dedicated to reducing the impact of our operations on the environment and ensuring our projects have a positive effect on our local community. “The buildings we are currently constructing will be in place in 50 years, and even longer in some cases, so sustainable construction is required to safeguard these structures for the next generation.” The Journey to Net Zero strategy, announced by Henry Brothers in February, outlined the key steps on its journey to decarbonisation by building on the extensive foundations already in place. Ian continued: “Sustainability has been at the heart of our company for over two decades, with many of our eco-friendly practices adopted a number of years ago and progress recorded since 2014. “The outcomes of our initiatives to date – which include developing the Henry Brothers Nature Reserve, founding the Sustainability Professionals Forum, and creating a Carbon Literacy Training Programme, with a typical saving of 5–15% per person – have been excellent, but we recognised that there was an opportunity to do more.”
Henry Brothers is also in its sixth year of a Research and Development Programme with Queen’s University Belfast, which has produced methodology for the quantification and tracking of greenhouse gas (GHG) emissions.
“We are extremely pleased with the impact that our environmentally friendly practices have had, but the launch of our Journey to Net Zero strategy is our most significant commitment to date,” Ian added.
Henry Brothers’ aim is to reduce its total GHG emissions by 2% each year for the next nine years. This will be achieved through a number of initiatives such as implementing 100% hybrid/electric cars by 2025, the widespread use of eco-cabins by 2025, and enhancing its biodiversity by 2% a year.
WORKING TOGETHER
The targets that have been set are ambitious, but Ian believes that they can be achieved by working in partnership with staff, clients, suppliers, and subcontractors. “While the construction industry has a vital role to play in mitigating the impact of construction, we also have a responsibility to influence and educate customers and the supply chain,” he said. “A large focus of our net zero journey is informing clients of the options that are available to them as well as highlighting the benefits that can be gained by collaborating to achieve this common goal. “The supply chain must be involved to ensure that the highest standards are being delivered industry-wide. “We work with our suppliers to reduce, minimise, and remove plastic packaging from products we purchase, for example. Small steps such as this can make a large difference, especially when they are implemented across all factions of the business.”
BUILDING FOR THE FUTURE
For Henry Brothers, a key step on the journey is the completion of its first net zero building – Staffordshire University’s Nursery and Forest School. The building, which incorporates an air source heat pump, roof-mounted solar panels, and an earth tube passive cooling system, will stand as a blueprint for future builds and shape upcoming low-carbon schemes. Ian said: “Staffordshire University’s net zero facility champions alternative construction and should help drive change, not only within Henry Brothers but in the wider construction industry.” Ultra-low-energy technologies have also been utilised in Henry Brothers’ Passivhaus Project at Loughborough University’s Sports Park Pavilion. Efficient heat pumps, triple-glazed windows, and well-insulated building fabric are just a few of the methods being implemented to considerably reduce carbon emissions.
“Our work has always been of the highest calibre, but to deliver projects that also benefit the environment is inspiring,” Ian added. “Through our commitment to sustainability, our clients are benefitting from cost-effective, innovative, and future-proofed buildings. “The bar has been set high, but we will continue to drive environmental leadership by identifying pioneering solutions and sharing best practice with our stakeholders. “While the road ahead might present its challenges, there is a tremendous opportunity for the construction industry to work together and make a significant change.”
For more information about Henry Brothers’ Journey to Net Zero, visit henrybrothers.co.uk/sustainability.
Translink -
Looking Ahead
Translink is transforming the face of local public transport, developing new Zero Emission technologies to drive a much-needed modal shift and deliver a Net Zero bus and rail fleet by 2040 – this will be good for our environment and our wider society and help to make public transport even more attractive to a growing number of passengers.
However, the shift to Net Zero is only part of our plan – we are also enhancing our network and our facilities, as well as developing and rolling out innovative, customer-focused ticketing solutions, defined by their ease of use, convenience and flexibility.
As the post-pandemic future takes shape, Translink is ambitious to grow and develop public transport further still – pre-pandemic, our passenger numbers were higher than they had been for 20 years; we want to build beyond that and encourage a societal shift to public transport and other forms of sustainable transport in the years ahead, and we believe we are well placed to do so. 100 new Zero Emission buses have been delivered for use by Metro in Belfast, which, alongside our existing Zero Emission vehicles, means that over one third of the Metro fleet now operates on Net Zero technologies. We already operate the fourth-largest Zero Emission bus fleet in the UK and Ireland, and our commitment to reducing our emissions will be strengthened next year, when Derry~Londonderry will become the first city in these islands to benefit from a wholly Zero Emission urban bus fleet.
Overall, Translink is well placed to meet our goal of delivering Net Zero public transport across our entire network by 2040 – in the coming years, we will move towards Zero Emission technology on our railway network also.
Belfast Grand Central Station is now progressing well and heralds a new beginning for public transport in the city and across Northern Ireland; when it enters service in 2025, it will greatly enhance bus and rail capacity in Belfast city centre and will replace the existing Europa Bus Centre and Great Victoria Street Train Station. We anticipate that the project, along with the associated Weavers Cross development, will act as a catalyst for regeneration in the area and ensure that Translink has the right infrastructure in place to encourage modal shift towards public and other sustainable forms of transport.
The facility will encourage local and international connectivity, with bus, coach and rail links to every part of Northern Ireland and beyond; we will also relocate the flagship Enterprise service from Lanyon Place when Belfast Grand Central enters operation – other sustainable modes, including walking and cycling, will be well catered for and will play their part in moving people efficiently to and from where they need to be. We are also planning considerable investment across the rest of our railway network, including replacement stations in Ballymena and Lurgan and a new facility at Lisburn West, to meet growing commuter demand. All our new intermediate train carriages, designed to create six-car walkthrough sets, will be in operation this summer. We are working with the Department for Infrastructure on the Phase 3 project on the Derry~Londonderry line, which has the potential to enhance service frequency and speed on that important inter-city corridor and along with colleagues in Irish Rail, we are supporting the All-Ireland Strategic Rail Review, which is examining the possibility of enhancing and expanding the railway network across Ireland. Working with Irish Rail and the SEUPB Peace Plus programme, we have plans to develop the Enterprise, cutting journey times between Belfast and Dublin and introducing an hourly service.
We look forward to delivering Glider phase 2, which will build on the strong success of the initial phase to connect north and south Belfast via the city centre, providing swift, reliable and accessible cross-city connections. We are also increasing our Park and Ride capacity along main routes into Belfast, delivering facilities at Mossley West and Trooperslane, with plans for major new capacity provision at Ballymena, Moira and Newtownards.
Translink contactless ticketing has commenced roll-out on Metro services in Belfast, with expansion to Foyle Metro, Ulsterbus, Goldline and NI Railways services to follow in the months ahead. This system will streamline the ticketing process and make it much simpler, more flexible and place the needs of the travelling public front and centre.
Translink’s better connected journey is ongoing, and we look forward to delivering a bus and rail network in Northern Ireland that is everyone’s first choice for travel, today for tomorrow.
More information can be found online at www.translink.co.uk
