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General changes impacting farmers

Budget 2019-General changes impacting farmers

Budget 2019-General changes impacting farmers

Building on last year’s Budget, the minister announced that the level of income at which people enter the higher rate of income tax of 40% is to be increased again for 2019. The increase of €750 for both a single person and a single-income couple will result in a single person reaching the higher income tax rate at a level of €35,300 and single-income couples reaching it at income levels of €44,300.

From a USC perspective, the minister announced that the ceiling at which the 2% rate applies will be increased from €19,372 to €19,874. In addition, the USC rate applying to income between €19,875 and €70,044 is to be reduced by 0.25% to 4.50%.

The earned income tax credit was introduced from 2016 to reduce the differential in taxes payable by employees and self-employed individuals.The minister announced that the credit for 2019 will increase by €200 to €1,350. As most farmers are sole traders, they will benefit from this increase in the earned income tax credit.

The minister announced an increase in the tax-free threshold that generally applies for CAT purposes for gifts or inheritances from a parent to a child. This threshold is to be increased from €310,000 to €320,000 and it is expected to take effect for gifts or inheritances taken on or after 10 October 2018.    

Specific farming measures

While recognising the significant contribution that agriculture makes to the economy, the minister acknowledged that the sector is facing a number of threats with Brexit posing specific challenges.   He also recognised that 2018 has been a difficult year for farmers and extended a number of farming related tax measures.

Stock relief provides for an additional tax deduction for an increase in stock during the tax year.  This been extended for a 3 year period until the end of 2021.  This extension applies to the three separate stock relief measures, which are:

  • the general 25% stock relief
  • the 50% stock relief for registered farm partnerships
  •  the 100% stock relief for certain young trained farmers

Income averaging allows certain farmers to pay tax based on average profits over a 5 year period and is intended to assist farmers in dealing with the income volatility associated with the industry. The eligibility for this relief has been extended to farmers with non-farming income.

At present, where certain conditions are met, young trained farmers under the age of 35 can avail of a stamp duty exemption on transfers of agricultural land.  The exemption was due to expire on 31 December 2018. The minister confirmed that the exemption will be extended for a further three years to 31 December 2021.  

The financial resolutions passed on budget day confirm that the VAT measures to increase the VAT rate on the hospitality industry to 13.5% also apply to the sale of bloodstock. However, the sales of bloodstock to farmers should continue to qualify for the 4.8% VAT rate.

These taxation measures were complemented by increases in funding for the Department of Agriculture, Food and the Marine and other Brexit related support, including a new Future Growth Loan Scheme that will be available to the agriculture and food sector as well as to SMEs.  Agriculture will also benefit from climate related measures including funding for the Targeted Agriculture Modernisation Scheme. 

This article appeared in the Sunday Business Post, and is reproduced here with their kind permission.