HMRC's draft guidance on the new Northern Ireland Corporation Tax regime paves the way for a lower rate of Corporation Tax than the rest of the UK.

The Corporation Tax (Northern Ireland) Act 2015 allows for devolution of power to the Northern Ireland Assembly to set a Northern Ireland rate of Corporation Tax to apply to certain trading income.

Changes to the Corporation Tax rate will not be legislated until the Northern Ireland Executive’s finances are on a sustainable footing.

  • The Northern Ireland Executive had committed to a rate of 12.5% from April 2018. The new rate has yet to become law.
  • This is intended to apply to most trading activities, with exclusions for oil and gas and the majority of financial activities.
  • It will apply to SMEs where the company’s employee time and costs fall largely in Northern Ireland.
  • For large companies, it is intended to apply to profits attributable to a Northern Ireland trading presence.
    • This is being extended to allow SME who are not Northern Ireland employers to opt into the large company scheme (Finance (No.2) Act 2017).
    • 'Trading presence' is defined in line with the rules for Permanent Establishments in international cases.
  • Similar rules will apply for corporate partners.

The Autumn 2017 budget announced that Finance Bill 2017-18 would include a provision to amend CTA 2010 to ensure that the Northern Ireland Education Authority, which has provided state-funded education in Northern Ireland since 2015,  is exempt from Corporation Tax. This will bring Northern Ireland into line with England, Wales and Scotland in respect of the taxation of state education. The change introduced has taken effect from 1 April 2015.


Northern Ireland Corporation Tax Rate (subscriber guide)

External links

Northern Ireland Corporation Tax regime: Draft guidance

Corporation Tax: exemption for Northern Ireland Education Authority