Dairy

Scenario 1

David is milking 80 cows in Laois. His wife, Mary, does not work off-farm so the farm generates the full family income.

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Farm turnover amounts to €300,000, excluding basic payments. He has earned an average of €65,000 in the last three years. They have two children under the age of 10.

Outcome

With no increase in the married persons tax credit or self-employed credit, as well as no increase of in the standard rate tax band, no direct income tax benefit will occur.

However, a small reduction in the USC – a further benefit of €13 – will be offset by a PRSI rate increase (from 24) of €73 which results in a net loss of €60. As a flat-rate farmer, the decrease in VAT amounts to a loss of approximately €1,700. The energy credit was not renewed and will be further disadvantaged by the increased energy and fuel costs arising from the carbon tax increase.

Scenario 2

Aoife is a single dairy farmer in Sligo, milking 80 cows. While the weather impacted her business, costs have not risen as much and she expects to have an income of €50,000 this year. Aoife’s farm is very fragmented and uses approximately 1,500l of road diesel.

Outcome

With no increase in the single persons tax credit or the self-employed credit, as well as no increase in the standard rate tax band, Aoife will be no better off Income Tax-wise and with a small reduction in USC of €13 offset by a PRSI increase of €56, it is an overall net loss to Aoife of €43.

The VAT decrease effect on sales will be a loss of approximately €1,200. The energy credit was not renewed and will be further pain, with increased costs of energy on fuel resulting from the increase in the carbon tax.

Sucklers and sheep

Peter is married to Joan and has two children. They have 90ac in a mixed farm, sucklers and sheep. They have a car, jeep and a 100hp tractor. They travel 15,000km in the car, 10,000km in the jeep and burn 1,000l of diesel in the tractor.

Joan cares full-time for her two children and earns less than €7,200 off-farm. Peter’s farm income amounts to €40,000.

Outcome

With no increase in the married persons tax credit and the self-employed credit remaining untouched and no increase in the home carers credit, no income tax benefit will arise.

A small decrease in USC of €13, offset by a €15 increase in PRSI, will mean a net loss of €2. The double child benefit payment will be significant. The carbon tax increase will fit the cost of fuel by approximately €200.

Tillage

John is a single man and farms 250ac, 100ac of which is owned, and the rest is on a long-term lease.

Last year, his tillage enterprise had an income of €255,000 and profit of €55,000 which he expects to stay the same this year.

He has land zoned residential on an out farm near a major town that is being farmed and was hoping for some budget relief on the residential zoned land tax (RZLT).

If there is no change on this it could make farming unviable.

Outcome

John will have no benefit in income tax. A small reduction of €13 in USC will be offset by a PRSI increase of 0.1% costing €62.

All-in-all a net loss of €49. However, the news on the RZLT could be positive but details are awaited in the Finance Bill to see how this de-zoning could apply.

The increase in the flat-rate will not have an impact on John as he is VAT-registered.

Young farmer

Michael is 22 and a recent agricultural college graduate. He is returning home to take over the farm from his uncle. His father is hoping to gift him the farm in 2024.

The 100ac is currently valued at €1.5m. They are also looking at selling an out-farm of 25ac to buy a piece of land closer to them. Michael also runs his own agri-contracting business making a profit of €45,000 and uses approximately 9,000l of diesel per annum which could be impacted by the new carbon tax rate.

Outcome

With a carbon tax increase of 2.5c/l, there will be an impact on his contracting business. With no carbon tax relief on the fuel used in the agri contracting he will have to pass on the cost.

The extension of stamp duty relief and young trained farmer stock relief to the end of 2029 was good news. Farm consolidation relief was extended to end of 2029, this will allow the land to be sold and purchased with capital tax reliefs minimising the tax.

Changes to the transfer rules which occurred in Budget 2025 with the ceiling increasing to €400,000 from 2 October 2024 remains and with no changes imminent on agricultural relief as stated by the Minister for Agriculture, now is a good time for Michael to examine the transfer options and he needs to ensure that he can qualify for favourite nephew relief on the land being taken from the uncle and his father.

The Generational Renewal report and its implementation of same will be eagerly awaited. No income tax changes on tax credits and no increase in tax bands will mean no net income tax benefit and with a small reduction of USC of €13 this will be offset by a PRSI increase by 0.1% for each year until it reaches 4.7% at a cost this year of approximately €51.

Hill sheep

Andrew is a small hill sheep farmer and is married to Alice. They have four children aged between two and 18. Alice works part-time off-farm and earns €12,000 per annum.

Andrew is a recipient of Farm Assist.

Outcome

Andrew would have no income tax/USC liability. He will have no tax gain on the previous year, but schemes will be vital to his enterprise.

Also, the increase in child support benefits and the extension of back-to-school clothing and footwear to two and three year olds, together with the one-off double Christmas bonus, will be a major help. No energy credit this year together with carbon tax will increase energy costs.