Tax is still the topic every farmer prefers to avoid, but the deadline looms every year in mid-November. For many it’s the next biggest outgoing after feed and fertiliser. With higher farm incomes across 2024 and a bullish outlook for 2025, farmers need to start budgeting now for rising tax bills.

Across dairy, beef and tillage, 2024 profits have outpaced 2023, with 2025 likely to increase again if current price trends hold. That means the tax bills due this November (on 2024 profits) and November 2026 (on 2025 profits) could be the largest since 2022.

We’re urging all farmers to take a proactive approach — not just to reduce tax, but to ensure they’ve the cashflow to meet the bills.

Case Study – midlands dairy farmer

Let’s take the example of a typical 80-cow spring calving farmer based in the midlands:

  • 118 acres owned in two blocks.
  • Sole trader business.
  • Spouse working off-farm (full use of standard rate band and tax credits).
  • Drawings: €18,000–€20,000 per year.
  • Three adult children (two working away, one in college).
  • Last major investment: parlour and slurry storage (seven years ago).
  • Loan: €67,000 remaining with four years left.
  • Capital allowances falling sharply.
  • No HP or short-term debt.
  • No identified successor.

    • A: Updated 2024 tax liabilities (2023 vs 2024)

    Even though profits rose 27%, the net tax liability jumped 72%, mainly due to lower capital allowances and more income taxed at the higher 40% rate.

    B: Cashflow implications – with pensions

    The farmer’s 2024 tax and pension outlay jumps to €81,286, up over 41% from the previous year. While pensions represent half the cost, they’re also saving tax at the 40% rate and building a retirement fund.

    If 2025 turns out to be a lower-profit year, the farmer may qualify for a refund when filing in 2026 tax return.

    C: What if no pension contributions were made?

    Without pensions, the farmer pays more tax in cash and loses out on long-term savings. The tax on higher-rate income has a major impact. The farmer in this case did make a pension contribution in 2024 and intends to continue in 2025.

    Planning ahead – 2024 and 2025

    With 2025 profits expected to increase again, farmers must:

  • Finalise 2024 accounts before autumn.
  • Choose the right preliminary tax basis.
  • Budget realistically for tax and pension cash outflows.
  • Decide if their structure is still fit for purpose.

    • Preliminary tax – options for 2025

    Sole traders can choose one of the following options for preliminary tax:

  • 90% of actual 2025 tax liability (requires accurate estimates by Oct/Nov).
  • 100% of 2024 liability.
  • 105% of 2023 liability (via three monthly direct debits the first year and eight monthly instalments for each subsequent year).

    • For this farmer, if 2025 profits fall, they may choose the 90% route based on draft accounts. If they opt for the 105% method.

    Advice for all farmers

  • Draft your 2024 accounts now — don’t wait until October.
  • If using 105% of 2023, set up the direct debit early.
  • Review all tax credits, reliefs, and expenses (stock relief, motor, ESB, medical).
  • Talk to your adviser about pension planning – it’s not just tax relief, it’s your future income.
  • Consider income averaging or incorporation if profits are rising over multiple years.
  • Watch out for large preliminary tax demands — make sure you’re not overpaying.