In Declan McEvoy’s recent webinar focused on Topical Update for Income Tax and VAT for Farming, the key elements of the Finance Act 2024 were outlined, highlighting important changes for those involved in the agricultural sector. The Act brings about several adjustments that farmers, advisors, and contractors need to be aware of as they plan for the coming years.

Stock Relief Extended

One of the significant measures in Finance Act 2024 is the extension of stock relief, detailed under Section 38. Stock relief has been crucial for farmers in managing tax liabilities related to the increase in value of farm trading stock. Under the new provisions:

• The standard 25% stock relief remains available to all farmers.
• A 50% stock relief continues to be available for those operating within registered farm partnerships.
• 100% stock relief is extended for young trained farmers.

This extension now runs through 31 December 2027, providing an additional three years of benefit. Importantly, the 100% stock relief for young trained farmers links to the €100,000 limit on tax savings available under the stamp duty relief for young trained farmers, reinforcing government support for farm succession and generational renewal.

Farm Payments and Obsolete Sections

Section 39 of the Finance Act addressed farm payments, while the Act also repealed several obsolete sections related to sugar beet quotas, sugar beet compensation, and milk quotas (sections 657A, 657B, 659A, and 669F). These sections were outdated, reflecting previous agricultural support schemes that are no longer in operation. The repeal tidies up tax legislation to reflect the modern structure of farm supports.

VAT Changes: Farmers' Flat-Rate Addition

The farmers' flat-rate addition, which compensates unregistered farmers for VAT on inputs, saw an adjustment from 4.8% to 5.1%, effective from January 1, 2025. This rate is based on a three-year average and is an important measure in ensuring that farmers not registered for VAT are not disadvantaged.

Carbon Tax: Increases and Deferments for Agriculture

The Finance Act continued the planned trajectory of increasing carbon taxes in line with the government's climate commitments:

• The carbon tax will increase by €7.50 per tonne from 9 October 2024.
• However, recognising the challenges faced by the agricultural sector, the application of increased carbon taxes on agri-fuels is deferred until 1 May 2025.

The immediate financial impact is expected to be 2–3 cents per litre increase in fuel costs. While farmers can claim a tax deduction for the increase in carbon tax, contractors do not benefit from this relief, highlighting a divergence in the treatment of different players within the agricultural ecosystem.

Stamp Duty on Agricultural Property

Although agricultural property was addressed in the Finance Act, the major anticipated changes have been postponed pending a ministerial order. Stakeholders in the agricultural property market should stay alert for further developments once the order is signed.

The Finance Act 2024 introduces several important updates that will directly impact the farming sector, from extensions of key reliefs to adjustments in carbon taxes and VAT treatment. Farmers, advisors, and contractors should ensure they understand these changes to optimize their tax planning and compliance in the years ahead.

For the full session, please click here. Declan McEvoy covers the following topics during this course:

• Stock relief and the issues

• Compulsory disposal relief

• Accelerated allowances

• Vat 58 update and review

• Structure review including PRSI issues.

• Revisit the basics

• Topical appeals relevant to farming

The contents of this article are meant as a guide only and are not a substitute for professional advice. The author/s accept no responsibility for any action taken, or refrained from, as a result of the material contained in this document. Specific advice should be obtained before acting or refraining from acting, in connection with the matters dealt with in this article. The information at the time of publishing was accurate and could be subject to final changes.