Tax Efficiency for Farmers

Muckit

Have you any tips on saving tax for part time farmers already in high tax bracket?

Puds can you have a car basically as a 'company car'?


[Split from 'Money in Beef]

Now keep on topic please. No firing personal insults or sniping at each other.

-Kovu-

smcgiff

Muckit wrote: »

Puds can you have a car basically as a 'company car'?

Unless your farm is a limited company you cannot have a company car, but you can claim a business use of a private car.

Re reducing tax liability, are you paying money into a pension?

Muckit

How would that work? If the farm didn't own the car, how could it depreciate it?

smcgiff

Muckit wrote: »

How would that work? If the farm didn't own the car, how could it depreciate it?

You can get a certain business usage agreed with revenue as a business element, say 30%. Then you'd depreciate the car as normal and then claim 30% as an expense.

Again, if not a limited company there is no difference between the farm and other assets you own and therefore if you use your car for business use it can be partially claimed.

Farmer Pudsey

Muckit wrote: »

Have you any tips on saving tax AP for part time farmers already in high tax bracket?

Puds can you have a car basically as a 'company car'?

Tax treatment of Cars is on the 2/3's- 1/3 rule. In that 2/3 of the cost is assigned to the farm. If I have a car that is capitalised at 12K then 8K is assigned to the farm. Along with 2/3 of maintenance and fuel costs. say if maintenance costs 1200/year and fuel costs 2500 then total allowances including capital allowances is nearly 3.5K.

However a Van is treated different if you had a small van(berlingo caddy etc) the complete capital value is allowable and total fuel and maintenance cost. I have one of each on accounts and accountant deals with all fuel on the 2/3-1/3 basis but treats maintenace and capitalised allowances different.

Biggest tax tip is keep all receipts and take even the FJ by buying the online and getting the voucher for the copy each week you have a tax receipt with out having to keep mast heads or till receipt. I believe that Tuesday Indo is also allowable.

However another tax allowable cost that most fail to use is family labour. We all have our young lad or lassie that gives a hand. You can employ them and pay them up to 8K tax efficiently. I know you can do it from 16 years of age know a lad that had them from earlier however this was from within a company setup.

AP2014

Muckit wrote: »

Have you any tips on saving tax AP for part time farmers already in high tax bracket?

Puds can you have a car basically as a 'company car'?

Howya Muckit, jaysus do lads have to worry about paying tax? Besides myself I got the impression everyone around here seems to be losing money

I am a paye worker so pay my taxes both ways and am glad to do so. I get SFP and DAS which are generous handouts. As smcgiff said the pension is a good way. Or lads that aren't making a penny get a new tractor every 3 years. No money in farming :rolleyes:

I am going on agridirect now to sort some things out for next year. Accountant takes care of the rest, i.e car, esb, feul, phone etc.

I reckon ya should start a thread on it though as it would be beneficial to alot of lads and we all could learn a thing or too. Might hunt out some cute hoors here who aren't making a penny in this game and making no money from farming.

smcgiff

Farmer Pudsey, the 2/3rds allowable wouldn't apply to everyone, but definitely sounds plausible for a full time farmer, probably tougher to get agreed if part time.

Mac Taylor

smcgiff wrote: »

My background. I'm writing this from my wife's parent's house. This used to be a dairy farm that raised 6 kids. It is now run by my wife's brother as a beef farm. He works it part time.

I used to work as a Financial Controller in a large beef abattoir.

I don't want to derail this thread, but to my mind farmers need to take back the power. They did it decades ago with dairy co-ops, and I think farmers need to create and operate their own abattoir co-op.

At present they are hostages to an industry that sees them as inputs that they try to get at the least cost possible, regardless of the welfare of the primary producers.

Personally, I agree with the sentiment but rather than setting another abattoir, we need more high end markets, I'd sooner put the money into setting up a sales and marketing co-op. (Similar to the kerrygold brand) the co-ops make their margin regardless of where they sell or at what price. Morrisons announced before Xmas that all the premium meat space would be stocked with British beef. Where does that leave our premium product.....catering, prisons etc

Farmer Pudsey

smcgiff wrote: »

Farmer Pudsey, the 2/3rds allowable wouldn't apply to everyone, but definitely sounds plausible for a full time farmer, probably tougher to get agreed if part time.[/QUO

From the very start it has been allowable at this rate.

smcgiff

Mac Taylor wrote: »

Personally, I agree with the sentiment but rather than setting another abattoir, we need more high end markets, I'd sooner put the money into setting up a sales and marketing co-op. (Similar to the kerrygold brand) the co-ops make their margin regardless of where they sell or at what price. Morrisons announced before Xmas that all the premium meat space would be stocked with British beef. Where does that leave our premium product.....catering, prisons etc

You're right. Getting sales for the end product is crucial. This is where the big money is and where the factories are getting the max out of the industry, especially foreign markets. But if you don't control/influence the abattoir process you're still a hostage to fortune. Even the rumour of organising to set up a factory would pay dividends, imo.

smcgiff

Farmer Pudsey wrote: »

From the very start it has been allowable at this rate.

Are you saying revenue will allow a part time farmer to use 2/3s of a private vechicle as business use the same as a full time farmer?

Tyson Lannister

On the tax efficiency issue - If i wanted to build a farm office would it be acceptable for all the materials etc to be written off against tax? Also, would this have to be built on the farm ie. my house is several miles from the farm and I was thinking of building it out the back?

Muckit

AP2014 wrote: »

I reckon ya should start a thread on it though as it would be beneficial to alot of lads and we all could learn a thing or too..

Thanks. Mods can split and start new tread called 'tax efficiencies' or something if they like

Farmer Pudsey

smcgiff wrote: »

Are you saying revenue will allow a part time farmer to use 2/3s of a private vechicle as business use the same as a full time farmer?

The 2/3-1/3 rules is right across sole traders. It is not just applying to farming. If I work and run a resturant, chipper, shop, hairdress etc. Anyone I know ahs the rule applied the same way. It is understandable really. Why should any sole trader be taxed differently. It would be very hard for revenue toapply different rules to different small business.

Take a small business that works from home in any of the above situtations and the partner is a PAYE worker. They apply for capital relief on a car, how can revenue decide if that is the ST or PAYE workers car. This is one of the resons that there was a move by some workers to try to move from PAYE to ST's in IT and revenue managed in that case to force some of them back into the PAYE system because they were working only for the one company and provided no service but labout to them.

It is interesting however in that a good few of RTE's main presenters work the same system and in there case the same rules are not applied.

We can leave taxation there for the moment I think I be slow to delve too far into tax as it is a minefield and often Revenue change the rules very fast.

darragh_haven

AP2014 wrote: »

No one thinks that robo. Its xmas ya need to go out and have a few pints and get the leg over. You will feel better about 2015.

What a stupid response. Cop on a bit.

As you are a paye worker as well. Do you have to pay the high rate of tax on the 12 or so thousand you earn from the farm?

darragh_haven

AP2014 wrote: »

If he gives it out he can take it. So cop on yourself. We all should pay our taxes. Farmers get a bad name from those who don't.

Again. Do you pay the high rate of tax on your approx 12k profits.

Farmer Pudsey

Robson99 wrote: »

I'm knocking anyone who is making money in farming. I just have no time for bulls**tters who think think everything they touch turns into gold.

It is not about everything you touch turning to gold, rather about knowing what is profit and what is not. I see the same lads that say there is nothing out of farming buying slurry spreaders and then having to buy a bigger tractor to use it. The fella that buys a jeep and then a 12X6 box because the 8X5 box is illegally behind the car or Van when in reality the f@@king jeep would be illegal with a 10X5 3/4 loaded. Then there complaining there is no money in farming.

This year transport cost me about 6-700 euro it is fully deductable year on year. I allow for it in cattle costs at about 12/head/year.

darragh_haven wrote: »

What a stupid response. Cop on a bit.

As you are a paye worker as well. Do you have to pay the high rate of tax on the 12 or so thousand you earn from the farm?

Unless he is an idiot he aint going to hand 6K to the revenue. He will use every legal avoidance measure possible and then he will look at a PRSA or a pension contribution.

I am off out now.

Willfarman

I see lads buying jeeps and trailers and puttin diesel into them, and I see lads building houses outa solid gold bars.. As long as I have it in my head that I'm better than lads I see well sure I'm ****in minted.

Blackgrass

Willfarman wrote: »

I see lads buying jeeps and trailers and puttin diesel into them, and I see lads building houses outa solid gold bars.. As long as I have it in my head that I'm better than lads I see well sure I'm ****in minted.

Putting diesel in them?! I always thought they ran them on some high% absinthe and it was the fumes that caused them to delude themselves they're making monies. These the same guys hailing stock boxes on Range rovers and x5's? Pfffft fools. :pac: :rolleyes:

AP2014

Robson99 wrote: »

You sure do have the answer for everything.
You know nothing about my personal circumstances so I would suggest you keep your playschool advice to yourself

The hour you sent this on stephens night would have me worried but I don't know anything about your circumstances. I hope all is good. Make sure to get out and have a few pints over the holidays. The farm will be there when you get home and 2015 could be the best year yet.

whupdedo

Still fighting between yourselves lads, just like out in the real world, keep it up that's exactly what the factories and supermarkets and the I F A want ye to do

AP2014

darragh_haven wrote: »

Again. Do you pay the high rate of tax on your approx 12k profits.

See the response from pudsey on previous page, sums it up nicely. If you are using your farm to avoid paying tax maybe you are making some money too.

onyerbikepat

Might be no harm split this thread alright.

darragh_haven

AP2014 wrote: »

See the response from pudsey on previous page, sums it up nicely. If you are using your farm to avoid paying tax maybe you are making some money too.

You are very defensive. I and my dad operate a kinda similar operation to you but all nutrients are returned to soil. Cattle finished on grass and feck all meal fed. Excess silage bakes sold, so I'm not dismissing your operation.
Just quering how deal with tax as I too have a Paye job and a private pension but any profit I would personally take from the farm would be raped by the tax man. Therefore my dad takes as much as possible in the low tax band

smcgiff

Farmer Pudsey wrote: »

The 2/3-1/3 rules is right across sole traders. It is not just applying to farming. If I work and run a resturant, chipper, shop, hairdress etc. Anyone I know ahs the rule applied the same way. It is understandable really. Why should any sole trader be taxed differently. It would be very hard for revenue toapply different rules to different small business.

Take a small business that works from home in any of the above situtations and the partner is a PAYE worker. They apply for capital relief on a car, how can revenue decide if that is the ST or PAYE workers car. This is one of the resons that there was a move by some workers to try to move from PAYE to ST's in IT and revenue managed in that case to force some of them back into the PAYE system because they were working only for the one company and provided no service but labout to them.

It is interesting however in that a good few of RTE's main presenters work the same system and in there case the same rules are not applied.

We can leave taxation there for the moment I think I be slow to delve too far into tax as it is a minefield and often Revenue change the rules very fast.

I think you've taken me up wrong. Firstly every business person has a right to be treated separately, and if you use your car more than 2/3's business you should argue it with revenue.

However, my initial point is that a part time farmer (or any part time sole trader) will find it very hard to claim 2/3's of their private car as business use.

AP2014

darragh_haven wrote: »

You are very defensive. I and my dad operate a kinda similar operation to you but all nutrients are returned to soil. Cattle finished on grass and feck all meal fed. Excess silage bakes sold, so I'm not dismissing your operation.
Just quering how deal with tax as I too have a Paye job and a private pension but any profit I would personally take from the farm would be raped by the tax man. Therefore my dad takes as much as possible in the low tax band

Well if ya come in with an aggressive cop on message what dk you expect? Anyway lets leave it at that.

Is your dad still working? If he was pension age you could pay him up to 200 a week without affecting his pension as a farm employee. Or your mother. Its all legal.

The pension is a great investment hopefully for the future. Do you find your self hit with big tax bills at the end of year?

Farmer Pudsey

smcgiff wrote: »

I think you've taken me up wrong. Firstly every business person has a right to be treated separately, and if you use your car more than 2/3's business you should argue it with revenue.

However, my initial point is that a part time farmer (or any part time sole trader) will find it very hard to claim 2/3's of their private car as business use.

Two farmers one part time one full rime. Both farm the same amount of land. Both drystock farmers.

Fulltime farmer is a suckler farmer her husband has a good job 50 miles away they have a car worth 20K her name and write off ancillary costs. He has a small van/jeep as well. His land is all in the one holding

Parttime farmer is in drystock his wife is a stay at home mother. She has a 10 year old MPV. He drives a car worth 15K his job is 20 miles away and he holding is split in 3 parts. He is at the mart once a week on average through out the year.

How should revenue treat there car expenses

Milton09

smcgiff wrote: »

However, my initial point is that a part time farmer (or any part time sole trader) will find it very hard to claim 2/3's of their private car as business use.

My accountant always does it this way for me, and AFAIK he does it for all his part-time clients.

Count Mondego

Milton09 wrote: »

My accountant always does it this way for me, and AFAIK he does it for all his part-time clients.

Same here, and I doubt we have the same accountant.

smcgiff

Count Mondego wrote: »

Same here, and I doubt we have the same accountant.

Hi all,

How many have had a revenue audit? Surely ye can see the issue with a blanket rate applied whether the business is part-time or full time?

When in practice I've used a higher rate than 2/3 when warranted and nowhere near 2/3 when the tax payer was mostly PAYE (and rates in between).

In my opinion always using 2/3 is lazy. It could be denying a greater rate usage for a business person in certain circumstances and exposing another that would not be allowed 2/3 by revenue.

Simply, ask yourselves how much business use am I making of my car?

Milton09

smcgiff wrote: »

Hi all,

How many have had a revenue audit? Surely ye can see the issue with a blanket rate applied whether the business is part-time or full time?

When in practice I've used a higher rate than 2/3 when warranted and nowhere near 2/3 when the tax payer was mostly PAYE (and rates in between).

In my opinion always using 2/3 is lazy. It could be denying a greater rate usage for a business person in certain circumstances and exposing another that would not be allowed 2/3 by revenue.

Simply, ask yourselves how much business use am I making of my car?

What you are saying certainly makes sense, but my accountant is a fairly big operator in the area and has regular client audits, the vast majority of whom are farmers. I'd doubt he would still be doing it if he had been rapped on the knuckles for it before.

smcgiff

Milton09 wrote: »

What you are saying certainly makes sense, but my accountant is a fairly big operator in the area and has regular client audits, the vast majority of whom are farmers. I'd doubt he would still be doing it if he had been rapped on the knuckles for it before.

Maybe the revenue are happy he is claiming only 2/3

Although I suspect/hope he at least reviews on a case by case basis.

ml100

My account (big enough company) recommends claiming 1/3 for a car as I'm part time.

lakill Farm

how can you expect to get a blanket answer

its about been able to justify the expense is for business use.

now on so called fixed cost like motor tax, nct/doe and insurance a 100 euro isn't a big difference in the whole scheme for most

but variable costs like the difference 20e a week fuel versus 100 plus

or motor repairs as most are in direct reflection of mileage clocked

so the main things to consider

* what industry are you in. (single block dairy will use a lot less diesel than a cattle dealer sure)
* how many blocks of land have you owned or rented.
* do you buy or sell at the mart
* do you haul to mart or factory yourself
* do you collect meal from merchants or bulk delivery

So in my experience its about been able to justify the expense.

nhg

Just in relation to motor expenses, is a petrol car treated the same way as a diesel car?

Just we need to buy a second car (thinking 05 d4d Corolla but tax is high) if I go back out working (I would be travelling 10km per day/5 days a week as work local) O/H will use the jeep as it is needed on farm full time.

We live 10km from the farm so majority of second cars use would still be farm related as I would go out there after work & weekends to help out & would be cheaper to run than the jeep.

Farmer Pudsey

nhg wrote: »

Just in relation to motor expenses, is a petrol car treated the same way as a diesel car?

Just we need to buy a second car (thinking 05 d4d Corolla but tax is high) if I go back out working (I would be travelling 10km per day/5 days a week as work local) O/H will use the jeep as it is needed on farm full time.

We live 10km from the farm so majority of second cars use would still be farm related as I would go out there after work & weekends to help out & would be cheaper to run than the jeep.

Yes you can offset the expense of a car and a jeep. However on;y 2/3 of the car's expenses will be offset. Different accounts use different methods. In my case while the Car and Van are depreciated differently the fuel and running costs are treated as one cost and I am only allowed 66.6% of them against tax.

restive

Tyson Lannister wrote:

On the tax efficiency issue - If i wanted to build a farm office would it be acceptable for all the materials etc to be written off against tax? Also, would this have to be built on the farm ie. my house is several miles from the farm and I was thinking of building it out the back?

Did u ever receive an answer for this?

Bass Reeves

Tyson Lannister wrote: »

On the tax efficiency issue - If i wanted to build a farm office would it be acceptable for all the materials etc to be written off against tax? Also, would this have to be built on the farm ie. my house is several miles from the farm and I was thinking of building it out the back?

restive wrote: »

Did u ever receive an answer for this?

There is no reason what you can not as long as the farm justifies it and as long as when revenue call they see a farm office.