Transfer of Farm to Limited Company

HcksawJimDuggan

Currently doing a bit of research into the advantages/disadvantages of transferring a farm to a limited company. While each individuals case would vary depending on their circumstances I have come up with the following points/tax issues which may arise:

• Profit's taxed at 12.5% as opposed to 52%
• Limited Company does not qualify for land leasing exemption
• Potential CGT liability if transferring single farm payment entitlement
• May also attract VAT liability if value of entitlements transferred is above €37,500
• Stamp Duty Exemption for young trained farm is allowed where land is transferred to person first and limited company is subsequently set up for farming
• Stamp Duty Exemption not allowed where person is farming through a limited company at the time of the transfer.
• Does not suit farmer with large amount of drawing's
• Ideally, the individual would hold land and buildings personally and lease to the company. Rental income can be reduced by any interest on loans relating to land & buildings.

As it is a fairly broad area and one which is affected by almost all tax types I'm sure there are a couple of other issues that I may be missing. Anyone got any further points that should be considered? For instance, can agricultural relief be claimed on the inheritance of shares in a farming company provided the 80% test has been satisfied?

srsly78

The 15% corp tax is on TOP of the 52% marginal tax rate on your salary. Not instead of. Of course you can get around this by not making any profit, or by not paying yourself the money.

dogsears

srsly78 wrote: »

The 15% corp tax is on TOP of the 52% marginal tax rate on your salary. Not instead of.

The company's taxable profit would be after deducting salaries so this isn't right.

As regards agricultural relief, a similar relief (called business assets relief) is available for shares including shares in a farming company - its similar but not exactly the same.

srsly78

Oops yeah I explained that wrong. What I mean is paying yourself bonus from profits = double taxation.

MD1983

srsly78 wrote: »

Oops yeah I explained that wrong. What I mean is paying yourself bonus from profits = double taxation.

give up posting on tax topics, that is shocking