Dairy farmers should overpay their preliminary tax for 2025 in order to avoid a significant payment demand next year when milk prices are unlikely to be as strong, leading agri-taxation specialist Declan McEvoy has claimed.
Although McEvoy conceded that overpaying tax “would be foreign” to many farmers, he said the move was a sensible response given that milk prices could continue to fall into 2026.
There is growing unease that dairy farmers will face large tax bills for 2025, given the high milk prices paid since spring.
However, milk suppliers will have to settle their tax liabilities for 2025 next autumn when cashflow could be far tighter given the unsettled outlook for 2026 milk prices.
Good payment
“By overpaying the preliminary tax now, farmers will have a good payment on account for 2025, and they’ll be hoping that they won’t have a big balance if any to pay next year,” McEvoy explained.
“The preliminary tax for 2025 is 100% of the 2024 tax. But the income in 2025 is going to be substantially more than 2024,” he told the Irish Farmers Journal.
“So those guys who are not in companies, are still sole traders, where they’re cash-rich at the moment, these farmers should overpay their preliminary tax,” McEvoy maintained.
In relation to increased income in suckling this year, McEvoy said these farmers needed to look at income averaging.
“Suckler farmers have had a good 2024, they’ve had a bumper 2025.
“Income averaging averages the profit for five years, so these farmers now need to seriously look and plan around income averaging,” he said.
McEvoy’s views were shared by the Irish Natura and Hill Farmers Association (INHFA).
“We are encouraging farmers – many who are currently getting their tax returns finalised for 2024 – to discuss with their accountant any possible increased tax liability for 2025,” the INHFA stated.
“Farmers can consider options such as taking on board necessary farm expenditure that was previously deferred, income averaging, increased pension contributions or the possibility of leaving money aside to cover any increased tax liability,” the farm body added.
Agri-tax specialist Declan McEvoy
Dairy farmers should overpay their preliminary tax for 2025 in order to avoid a significant payment demand next year when milk prices are unlikely to be as strong, leading agri-taxation specialist Declan McEvoy has claimed.
Although McEvoy conceded that overpaying tax “would be foreign” to many farmers, he said the move was a sensible response given that milk prices could continue to fall into 2026.
There is growing unease that dairy farmers will face large tax bills for 2025, given the high milk prices paid since spring.
However, milk suppliers will have to settle their tax liabilities for 2025 next autumn when cashflow could be far tighter given the unsettled outlook for 2026 milk prices.
Good payment
“By overpaying the preliminary tax now, farmers will have a good payment on account for 2025, and they’ll be hoping that they won’t have a big balance if any to pay next year,” McEvoy explained.
“The preliminary tax for 2025 is 100% of the 2024 tax. But the income in 2025 is going to be substantially more than 2024,” he told the Irish Farmers Journal.
“So those guys who are not in companies, are still sole traders, where they’re cash-rich at the moment, these farmers should overpay their preliminary tax,” McEvoy maintained.
In relation to increased income in suckling this year, McEvoy said these farmers needed to look at income averaging.
“Suckler farmers have had a good 2024, they’ve had a bumper 2025.
“Income averaging averages the profit for five years, so these farmers now need to seriously look and plan around income averaging,” he said.
McEvoy’s views were shared by the Irish Natura and Hill Farmers Association (INHFA).
“We are encouraging farmers – many who are currently getting their tax returns finalised for 2024 – to discuss with their accountant any possible increased tax liability for 2025,” the INHFA stated.
“Farmers can consider options such as taking on board necessary farm expenditure that was previously deferred, income averaging, increased pension contributions or the possibility of leaving money aside to cover any increased tax liability,” the farm body added.
Agri-tax specialist Declan McEvoy
SHARING OPTIONS