Tax Write off with Farm Shed

moc85

Hi all,

Just a quick one for any of the farmers out there the may have some experience in this.

My father was left the family farm 4 years ago. It still hasn't been signed over as the will hasn't been executed yet. Two years ago my father built a slatted shed which cost just over 40k. Is it possible to still still write some of this off or what needs to happen when it's a farm expense?

Any help at all would be greatly appreciated

Charolois 19

I know when I started farming in 2017 I didn't submit any books until October 2020, I use an account who specialises in farm accounts and it was all taken into account, I actually got a refund on my paye tax as I was just starting out, id imagine if your father is in a similar position as I was there should be no issues, best bet would be for him to talk to an accountant tho as every situation is different. There might be some implications when it's not in his name?

Bass Reeves

The most important thing to do when you start farming is to do accounts. It likely your father has not kept receipts and has this assumption that he .along a loss and that just because he has no tax liability that is the end of it.

Unfortunately you have to show revenue that you are not making money. In any business you can carry losses forward however the real carrot is you can write business losses off against PAYE tax. Not only that but spouses inco e can be written off as well.

Tax deductible expenses include, car, telephone,
( Inc mobile) electricity are all written of at 66%, the rest is personnel. After that you have everything you put into the place such as fencing, machinery hire and in your case the shed.

Capital expenses such as cars, new labtop, new phone are 66% written off over 8years. Sheds, tractors fertlizer spreaders etc are again deprecated over eight years.

Vat is reclaimable on sheds, fencing gates, mai s electric fence etc.

OP you father needs to go to an accountant. I be surprised if he dose not get a tax refund of 5 figures. As well.I am sure you are helping him. What are are you. He should be paying you a wage to put you through college. It tax deductible

Tax refunds can be done 5 years in arrears

lakill Farm

on the Shed costs , you can claim the vat back on a vat 58 (4 year limit)


the net amount of the shed build then is claimed as a capital allowance over 7 years ( year 1-6 @15%) and year 7 10%

moc85 wrote: »

Hi all,

Just a quick one for any of the farmers out there the may have some experience in this.

My father was left the family farm 4 years ago. It still hasn't been signed over as the will hasn't been executed yet. Two years ago my father built a slatted shed which cost just over 40k. Is it possible to still still write some of this off or what needs to happen when it's a farm expense?

Any help at all would be greatly appreciated

jimmy G M

MOC good advice there from Bass and Lakhill. Lakhill is actually an Accountant in Westmeath and depending on your location it might suit you to contact him......

moc85

Thank you very much people, it's very much appreciated.

I would say he has kept a lot of the receipts or could have them reissued at the very least.

What is the situation in relation to a van for farming needs? He has always had a car but in truth needs a van so he can stop ruining his car with farming good etc. If he spent 10k on a van, can he also write some of that off? How does it work?

Bass Reeves

moc85 wrote: »

Thank you very much people, it's very much appreciated.

I would say he has kept a lot of the receipts or could have them reissued at the very least.

What is the situation in relation to a van for farming needs? He has always had a car but in truth needs a van so he can stop ruining his car with farming good etc. If he spent 10k on a van, can he also write some of that off? How does it work?

He can deprecate 2/3's of a car and the complete value of a van

moc85

Bass Reeves wrote: »

He can deprecate 2/3's of a car and the complete value of a van

Perfect. He has the car for the last 3 years and uses that for personal use also but the van would only be for the farm. How does the capital allowance get paid? Is it desucted from tax owed or is it a separate cheque you receive?

Bass Reeves

moc85 wrote: »

Perfect. He has the car for the last 3 years and uses that for personal use also but the van would only be for the farm. How does the capital allowance get paid? Is it desucted from tax owed or is it a separate cheque you receive?

Farm losses can usually only be written off for three years running. Then losses are stacked against future tax .

You father really need an accountant. FDC is probably the more suited to small sized farmers

moc85

Bass Reeves wrote: »

Farm losses can usually only be written off for three years running. Then losses are stacked against future tax .

Sorry, I meant if a van was bought in the next few months. How is it distributed?

jimmy G M

The capital allowances are 12.5% of the purchase price every year for 8 years.

For 2021 it depends on when he buys the van - ie the number of months he had the van for in 2021 eg 7/12 (of the 12.5%) and in the final year it would be 5/12.

The figure (depreciation in his farm accounts) is effectively a farm expense and is deducted off farm income similar to contractors, fertiliser etc

Also 100% of running expenses of the van, fuel, repairs, insurance, etc what ever they are each year are fully deductible.

If the farm expenses are high enough to cause a farm loss, the loss can be put against off farm income and so lead to a refund of tax paid in the off farm job or into the future.... as Bass outlined above.

Bass Reeves

jimmy G M wrote: »

The capital allowances are 12.5% of the purchase price every year for 8 years.

For 2021 it depends on when he buys the van - ie the number of months he had the van for in 2021 eg 7/12 (of the 12.5%) and in the final year it would be 5/12.

The figure (depreciation in his farm accounts) is effectively a farm expense and is deducted off farm income similar to contractors, fertiliser etc

Also 100% of running expenses of the van, fuel, repairs, insurance, etc what ever they are each year are fully deductible.

If the farm expenses are high enough to cause a farm loss, the loss can be put against off farm income and so lead to a refund of tax paid in the off farm job or into the future.... as Bass outlined above.

On the vat while my accountant use to deprecate the compete value of the van he used limp all maintenance, fuel and running costs and lump them in with the car and give me 2/3 of that.

Technically you can lump all van running costs but he felt this method was neater and less open to questions if you got an audit.

lakill Farm

Depreciation is not a farm expense

the depreciation figure is added back to the farm loss/profit hence making the loss less or profit more.

jimmy G M wrote: »

The capital allowances are 12.5% of the purchase price every year for 8 years.

For 2021 it depends on when he buys the van - ie the number of months he had the van for in 2021 eg 7/12 (of the 12.5%) and in the final year it would be 5/12.

The figure (depreciation in his farm accounts) is effectively a farm expense and is deducted off farm income similar to contractors, fertiliser etc

Also 100% of running expenses of the van, fuel, repairs, insurance, etc what ever they are each year are fully deductible.

If the farm expenses are high enough to cause a farm loss, the loss can be put against off farm income and so lead to a refund of tax paid in the off farm job or into the future.... as Bass outlined above.

jimmy G M

lakill Farm wrote: »

Depreciation is not a farm expense

the depreciation figure is added back to the farm loss/profit hence making the loss less or profit more.

Yes, I know... just trying to keep it relatively simple when explaining. I set my depreciation % the same as the Capital Allowances % allowed. Saying you add back the depreciation figure to the farm profit and then allow the capital allowances against the profit for tax calculation can cause confusion for those not overly familiar... but yes you are technically correct.