All farmers including sole traders and partnerships can offset the full cost of energy efficiency equipment against their taxable income in one year, according to Ciaran McCabe of IFAC.

The accountant told the recent Energy in Poultry conference that the measure was previously reserved for companies subject to corporation tax. However, it was extended last year to other farmers, who can use it in their income tax return.

“In a normal case, you can write off capital costs in eight years,” said McCabe – but the value of investments to cut energy use or generate renewables can be claimed up front with a “capital allowance of 100% in year one,” he explained.

The scheme is managed by the Sustainable Energy Authority of Ireland (SEAI), which maintains a list of eligible investments, efficiency criteria and minimum amounts. For example, variable-speed drives for vacuum pumps in milking parlours are tax-deductible in one year if they cost more than €1,000 and meet SEAI efficiency requirements. The same applies to solar panels, heat pumps, wind turbines and biomass boilers, among others. For low-consumption lights and lighting controls, the minimum spend is €3,000.

In addition, the equipment must be new and fully owned by the farmer for business use only. If it doesn’t match the criteria for the accelerated capital allowance, the investment can still avail of the normal wear and tear allowance of 12.5% each year over eight years.

In case a big investment is worth more than the farm’s profit in the first year, the farmer is allowed to carry the excess value into the following year, McCabe added.

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