Budget 2023: case studies on taxation changes

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

Farm turnover amounts to €300,000 excluding BPS.

He has earned an average of €65,000 in the last three years. They have two children under the age of 10.

Benefit

With the increase in the married persons tax credit of €75 and self-employed credit of €75, as well as the benefit from the increase of €3,200 in the standard rate tax band and the €32 saving in USC as a result of the small change, the family will be €1,006 per annum better off in income tax before the effect of VAT reduction.

As a flat-rate farmer, the reduction in VAT amounts to a loss of €150.The energy credit will have to be examined to see whether the business credit or the €600 has the maximum effect.

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 €65,000 this year, up from €55,000 last year. Aoife’s farm is very fragmented and uses approximately 1,500l of road diesel.

Benefit

With the increase in the single persons tax credit of €75 and the self-employed credit of €75, as well as the increase of €3,200 in the standard rate tax band, Aoife will be €831 better off per year with a further €32 reduction in USC, but the VAT effect on sales will be costing about €150. She will have a net gain of €681 before energy credits are taken into account. The net neutral effect of the carbon tax increase will have no impact.

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 children and earns less than €7,200 off-farm.

Benefit

With the increase in the married persons tax credit of €75 and the self-employed credit of €75, the €100 increase in the home carers credit and €32 in USC, respectively, the family benefits to the tune of €282. The carbon tax increase will be cost-neutral this year.

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 an empty house on an outfarm valued at €220,000 and was hoping for some budget incentives to rent this out.

Benefit

John will benefit to the tune of €150 for the increase in the tax credits, the increase in the standard rate band of €3,200 and the €32 USC change. All in – a net extra income of €831.

However, the vacant homes tax could have an impact and details are awaited on same.

If implemented, it could cost John €675. The reduction in flat-rate rate will not impact John as he is VAT-registered.

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 2023. The 100ac are currently valued at €1,200,000.

They are also looking at selling an outfarm of 25 acres to buy a piece of land closer to them.

Michael also runs his own agri-contracting business and uses approximately 9,000l of diesel per annum which could be impacted by a new carbon tax.

Benefit

With no net carbon tax increase, there will be zero cost effect and no carbon tax relief on the fuel used in the agri contracting, which is disappointing.

The extension of stamp duty relief and young trained farmer stock relief to the end of 2024-25 was good news.

Farm consolidation relief is available to the end of 2025 and will allow the land to be sold and purchased with capital tax reliefs minimising the tax.

No changes to the transfer rules occured, so 2023 is the year to examine before the recommendations of the Commission on Taxation are implemented.

Michael needs to ensure that he can qualify for favourite nephew relief on the land being taken from the uncle or major tax could apply.

The income tax changes on tax credits €150 and USC change of €32 will benefit him.

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.

Benefit

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 benefits of €12 per week and the one-off double payments will be a major help.