Key taxation measures in budget relevant to farmers
Introduction of earned income tax credit for self-employed including farmers at €550.
(This means €550 less tax if your taxable income from farming is €11,000 upwards. If your taxable income is less than €8,250 it makes no difference and there is a tax reduction in the range €1-550 if your income is between €8,250-11,000. If you already benefit from a PAYE tax credit (i.e. off-farm employment) then this measure is not relevant as you are already benefitting from the PAYE tax credit worth €1,650. Minister Noonan has committed to gradually increasing the earned income credit until it reaches the same level as the PAYE credit. ICSA has been lobbying hard on this since the proposal was originally included in the 2009 Commission on Taxation report.)
Pay Related Social Insurance (PRSI) & Universal Social Charge (USC)
There are no changes to the PRSI rates and bands for 2015.
The main rate has been reduced by 1.5% from 7% to 5.5% and the lower rates of 3.5% is reduced to 3% and the 1.5% rate is reduced to 1%.
The new levels are:
Incomes of €13,000 or less are exempt. Otherwise:
· €0 – €12,012 1.0%
· €12,013 – €18,668 3.0%
· €18,669 – €70,044 5.5%
· €70,045 – €100,000 8%
In the case of PAYE income the rate will remain at 8% for income in excess of
In the case of non-PAYE income in excess €100,000 the rate remains at 11%.
ICSA called for a reduction in USC and is pleased to see the reduction and a commitment to phase it out. It is a particularly sore tax for farmers because the normal capital allowances which can be claimed against income tax are not allowed against USC nor are private pension contributions. Hence, a cattle or sheep farmer who has invested in farm development (eg sheds, yard) could find a surprising liability to USC even though the income tax was covered by allowances.
Capital Acquisitions Tax
Threshold for Category A transfers (normally parent to child) increased from €225,000 to €280,000. Again a change sought by ICSA (looked for €300,000) and it will make a significant difference in certain cases. (i.e. allows inheritance of up to €2,800,000 agricultural assets where agricultural relief is available at 90%, without a tax bill)
Other tax measures for farmers
Stock Relief extended to end of 2018 at usual rates of 25% general, 50% for partnerships, 100% for trained young farmers.
Stamp duty exemption for young farmers also extended to 2018.
Special tax credit – €5,000 – for family partnerships where parent and successor form partnership with eventual transfer of farm to successor.
Pension levy of 0.15% scrapped from end of 2015.
Old age pension up €3/week.
Fuel allowance extra €2.50/week
Child benefit extra €5/month
€1.3 billion for Department of Agriculture.
Of which €494 million will be spent on the Rural Development programme ( increase of 12.5% on 2015) but still well shy of the average €580 million spend outlined over the 7 years of the RD programme, which indicates further substantial increases in spending in 2017-2019.)
Sheep fencing back as an eligible item for grant aid in TAMS.
GLAS re-opening but the limiting of the Low Input Permanent Pasture will severely compromise the attraction of this scheme to many.