Vehicle for farming purposes

SamM65

Hi all,

I’m a long time follower of the page and find some invaluable information here so I am hoping for some more with a query of my own.

My son is 21 and looking at getting a car. He helps out around the farm and I have heard it’s possible to also get a vehicle for farm use which I don’t have already. I wouldn’t be too savvy when it comes to accountancy practices but is it possible to get a vehicle that he can avail of and if so how is it deductible from the farm or would it make more sense to just buy it straight up?

Thank you in advance for any advice

amacca

There will be someone on to correct me in a second

But i think

you can buy a commercial vehicle for farm purposes, jeep, crewcab, caddy van etc and write that off over 8? Yrs....new or 2nd hand

And/or (I think its an or) a family car up to a certain displacement can be bought and up to a limit....you can buy more expensive but there is a tax relief limit on this


Insurance costs will still potentially be expensive and remember there may be a drawback if its a commercial in that I think the years experience and no claims bonus on a commercial policy doesn't transfer over to a private one I think (which if true stinks to high heaven imo)

blue5000

Welcome to boards. It would be a commercial vehicle, either a van or jeep I presume you are talking about? 100% of the costs of it could be put down to the farm as an expense.

SamM65

blue5000 wrote: »

Welcome to boards. It would be a commercial vehicle, either a van or jeep I presume you are talking about? 100% of the costs of it could be put down to the farm as an expense.

Thank you both for the replies. Ok, that’s great. How would that look if we bought a commercial van for say 5,000? My son would be paying the 5,000 so if I was receiving that back through relief etc how do I give that back to him? Apologies now I’m trying to make sense of it in my head.

wrangler

SamM65 wrote: »

Thank you both for the replies. Ok, that’s great. How would that look if we bought a commercial van for say 5,000? My son would be paying the 5,000 so if I was receiving that back through relief etc how do I give that back to him? Apologies now I’m trying to make sense of it in my head.

You'd have to be paying for the van to prove that it is an expense in your farm accounts

Base price

If your son is on a learner permit or only recently got a full licence then be very careful about buying a commercial vehicle due to insurance costs. Check out how much it would be before committing to buying a commercial be it if he is a named driver or the policy in his name.

Del2005

Base price wrote: »

If your son is on a learner permit or only recently got a full licence then be very careful about buying a commercial vehicle due to insurance costs. Check out how much it would be before committing to buying a commercial be it if he is a named driver or the policy in his name.

If it's going to be the sons vehicle he can't be a named driver, that's called fronting and insurance companies will void a policy if they find out. If you make a claim they'll cover the 3rd party but come after you for any money they paid out.

SamM65

Del2005 wrote: »

If it's going to be the sons vehicle he can't be a named driver, that's called fronting and insurance companies will void a policy if they find out. If you make a claim they'll cover the 3rd party but come after you for any money they paid out.

That’s for the heads up. Very much appreciated. Can he give me the cash and be a named driver also? It will be used for farming purposes but also be a vehicle for him. How do you identify this in accounts? Is there any way for me to set aside that monies each year when it comes in?

Del2005

SamM65 wrote: »

That’s for the heads up. Very much appreciated. Can he give me the cash and be a named driver also? It will be used for farming purposes but also be a vehicle for him. How do you identify this in accounts? Is there any way for me to set aside that monies each year when it comes in?

No, if its his vehicle he needs to be the policy holder. He could try to ad you as a named driver to reduce the premium, but 1st insurance is going to be expensive regardless of what age the person is so no point in delaying it.

You'll need to talk to your accountant about the taxes and other deductions.

AckwelFoley

You will need accountants advise.

You receiving the relief if he's paying for it won't look right on the books if he doesn't receive a credible income from the business

If he's not involved in the business and paying for the vehicle that is claimed against the farm you could be open to a tax liability there.

Having been through an audit i can assure you they have many angles covered

Cavanjack

You buy it and put it down as a farm expense. He can pay you back in cash. You are winning on the double then.

wrangler

Cavanjack wrote: »

You buy it and put it down as a farm expense. He can pay you back in cash. You are winning on the double then.

Even if you buy a van for 5000, you have to depreciate it over 7 years I think so you can only get tax relief on circa €700/yr or €200 /yr reduction if in the low tax bracket.
It's hardly worth the bother of all the messing, is it ?????

blue5000

wrangler wrote: »

Even if you buy a van for 5000, you have to depreciate it over 7 years I think so you can only get tax relief on circa €700/yr or €200 /yr reduction if in the low tax bracket.
It's hardly worth the bother of all the messing, is it ?????

Ok that's just the depreciation, but all the running costs of the van can be charged to the farm.

Del2005

blue5000 wrote: »

Ok that's just the depreciation, but all the running costs of the van can be charged to the farm.

Wouldn't the son need to be an employee of the farm to do this? There won't be much saving if you need to register the son as an employee and pay tax/USC etc.

Then you have the issue that it's the son's van not a farm van.

Bass Reeves

wrangler wrote: »

Even if you buy a van for 5000, you have to depreciate it over 7 years I think so you can only get tax relief on circa €700/yr or €200 /yr reduction if in the low tax bracket.
It's hardly worth the bother of all the messing, is it ?????

You could say the same about a lot of smaller expenses. However they all add up at the end of the year. The receipts for dog and cat food out of Lidl/Aldi totaled about 300 this year. The FI on Tuesdays was about 100euro. The receipts for paint for the rented houses 150euro road tolls 80-100euro. It's a little bit here a little bit there and you hit a few thousand very fast.

Yes you have to deprecate over 8 years irrespective of age. However an older car may only stay on the books 3-4 years. Then you end up with a balancing depreciation. Pay 5k only three years deprecation is about 2k. If it sells for 2k there is a wear and tear balance of another thousand.

OP what you are doing has risks. Insurance companies are constantly watching for people insuring younger drivers in there name. If you do it you have to put the van in your name. The money must come from your account from a tax point of view. It's risky as well if he is going to college a distance away and staying there. If there is an accident you need to make sure he understands to keep all bases covered. He also has to obey the rules of having no one in the back of the van etc.

Vans are more expensive in ways. CVRT is yearly and costs 110 and retests are 55.A CVRT is a harder test that an NCT IMO

wrangler

Bass Reeves wrote: »

You could say the same about a lot of smaller expenses. However they all add up at the end of the year. The receipts for dog and cat food out of Lidl/Aldi totaled about 300 this year. The FI on Tuesdays was about 100euro. The receipts for paint for the rented houses 150euro road tolls 80-100euro. It's a little bit here a little bit there and you hit a few thousand very fast.

Yes you have to deprecate over 8 years irrespective of age. However an older car may only stay on the books 3-4 years. Then you end up with a balancing depreciation. Pay 5k only three years deprecation is about 2k. If it sells for 2k there is a wear and tear balance of another thousand.

OP what you are doing has risks. Insurance companies are constantly watching for people insuring younger drivers in there name. If you do it you have to put the van in your name. The money must come from your account from a tax point of view. It's risky as well if he is going to college a distance away and staying there. If there is an accident you need to make sure he understands to keep all bases covered. He also has to obey the rules of having no one in the back of the van etc.

Vans are more expensive in ways. CVRT is yearly and costs 110 and retests are 55.A CVRT is a harder test that an NCT IMO

Yes I agree, I'm the one that buys jeeps and tractors purely for tax reductions.
My point is the little bit available on a 5000 van isn't worth messing the accounts for

SamM65

Thanks everyone, really appreciate the info.

The plan would be for me to purchase the vehicle and for me to be the main driver. It’s really just to get him from a to b...while also helping on the farm.

He will pay me the cash for the vehicle but what I’m wondering is it possible for me to give it back to him if I’m receiving it back? How would I be able to see what exactly what is coming back towards the specific vehicle?

wrangler

SamM65 wrote: »

Thanks everyone, really appreciate the info.

The plan would be for me to purchase the vehicle and for me to be the main driver. It’s really just to get him from a to b...while also helping on the farm.

He will pay me the cash for the vehicle but what I’m wondering is it possible for me to give it back to him if I’m receiving it back? How would I be able to see what exactly what is coming back towards the specific vehicle?

Put the payments in a receipt book, a receipt book is good and simple, It'll be on two pages and give him one
I think you're over complicating it, if he gives you cash you should be able to use it in the house, it's not a lot of money

Bass Reeves

SamM65 wrote: »

Thanks everyone, really appreciate the info.

The plan would be for me to purchase the vehicle and for me to be the main driver. It’s really just to get him from a to b...while also helping on the farm.

He will pay me the cash for the vehicle but what I’m wondering is it possible for me to give it back to him if I’m receiving it back? How would I be able to see what exactly what is coming back towards the specific vehicle?

You are ove thinking it. First off any savings on tax will be 18-24 months down the line. Get him to get diesel receipts and maintenance receipts as well. But he has to pay for them with cash not a card.

If he is putting diesel in it himself and buying the parts for the maintenance you will be getting a lot of it back. Its depends on the tax band you are in. If its the 20% if you could afford to give him 25% back if it the higher rate you coul give him 50% of the capital cost of the car back

mikeoc85

Bass Reeves wrote: »

You are ove thinking it. First off any savings on tax will be 18-24 months down the line. Get him to get diesel receipts and maintenance receipts as well. But he has to pay for them with cash not a card.

If he is putting diesel in it himself and buying the parts for the maintenance you will be getting a lot of it back. Its depends on the tax band you are in. If its the 20% if you could afford to give him 25% back if it the higher rate you coul give him 50% of the capital cost of the car back

Thanks everyone. Definitely over thinking it alright. I suppose budget would have been around 5k but if can claim most of it back then could maybe push it to a 10k budget. Just wondering how much of that 10k will you get back

893bet

Do you currently pay tax on your farm income is the main question here?

Bass Reeves

mikeoc85 wrote: »

Thanks everyone. Definitely over thinking it alright. I suppose budget would have been around 5k but if can claim most of it back then could maybe push it to a 10k budget. Just wondering how much of that 10k will you get back

No point in over doing it. Leave budget at 5k. It not so much you get money money money back as your tax bill is lowered

alps

You will also be signing a declaration at the Garda station that you will only use the van for commercial/farming purposes, and will never use it for private use.

wrangler

Bass Reeves wrote: »

No point in over doing it. Leave budget at 5k. It not so much you get money money money back as your tax bill is lowered

A good accountant won't accept high fuel and repair bills on a low income farm, it's things like that which brings on an audit

Del2005

SamM65 wrote: »

Thanks everyone, really appreciate the info.

The plan would be for me to purchase the vehicle and for me to be the main driver. It’s really just to get him from a to b...while also helping on the farm.

He will pay me the cash for the vehicle but what I’m wondering is it possible for me to give it back to him if I’m receiving it back? How would I be able to see what exactly what is coming back towards the specific vehicle?

You're back to fronting and serious insurance consequences with this idea as both of you could have a cancelled policy, at best, which means that you will struggle to get insurance again. If he's the main user of the vehicle it has to be insured in his name.

Bass Reeves

Del2005 wrote: »

You're back to fronting and serious insurance consequences with this idea as both of you could have a cancelled policy, at best, which means that you will struggle to get insurance again. If he's the main user of the vehicle it has to be insured in his name.

Not entirely true if it's a work vehicle for a business.

Mooooo

His insurance would prob come down faster if he has something privately insured in his own name, prob be better just to get a fiesta or something for himself and if ye need a van from the farm ye should be able to be pick one up rel inexpensively and use that there, have him named on it if need be. If ye helped him out with car purchase he could cover the first years insurance himself maybe

tellmeabit

Do the same rules apply to part time farmer and farm van?

SamM65

Mooooo wrote: »

His insurance would prob come down faster if he has something privately insured in his own name, prob be better just to get a fiesta or something for himself and if ye need a van from the farm ye should be able to be pick one up rel inexpensively and use that there, have him named on it if need be. If ye helped him out with car purchase he could cover the first years insurance himself maybe

Perfect. We may do that so as a van is needed also. How much of the cost of the van can you claim back and how is it claimed?

Mooooo

SamM65 wrote: »

Perfect. We may do that so as a van is needed also. How much of the cost of the van can you claim back and how is it claimed?

As van is commercial complete cost can be written off against farm profit along with running expenses. Van would be same as machinery depreciated over 7 years. Accountant may suggest adjusting how much of yer own personal car expenses which are down as farm expenses if ye get a van, normally its 2/3 farm 1/3 personal as a rule of thumb but once ye can justify to revenue it can be whatever.

Bass Reeves

Mooooo wrote: »

As van is commercial complete cost can be written off against farm profit along with running expenses. Van would be same as machinery depreciated over 7 years. Accountant may suggest adjusting how much of yer own personal car expenses which are down as farm expenses if ye get a van, normally its 2/3 farm 1/3 personal as a rule of thumb but once ye can justify to revenue it can be whatever.

When I had a van Accountant just treated them both as cars and depreciated them both at 2/3 farm and 2/3's of diesel and maintenance cost as expenses. Worked out better as car was worth more than the van.

SamM65

Thanks guys, ok I think I get it. If the farm turns a profit of say 3k how will the van be written off? Where will I see the 12.5%, will it just mean I pay the equilibrium of 12.5% less in tax or how does it work?

Del2005

Bass Reeves wrote: »

Not entirely true if it's a work vehicle for a business.

And when he's over at a friend's house or anywhere other than the mart/Co op what's the business use?

J.O. Farmer

SamM65 wrote: »

Thanks guys, ok I think I get it. If the farm turns a profit of say 3k how will the van be written off? Where will I see the 12.5%, will it just mean I pay the equilibrium of 12.5% less in tax or how does it work?

Your 3k profit will be reduced by the 12.5% so €625 on a 5k van so your profit will be €2,375 instead of 3k.

Grueller

Del2005 wrote: »

And when he's over at a friend's house or anywhere other than the mart/Co op what's the business use?

Borrowing a sledge hammer.

SamM65

Hi all,

It’s the son posting here. I think my father has confused the situation. I’m looking at buying a van, the farm was left to my father and it doesn’t really run much of a profit. In truth I probably do as much if not more on it than him as he has a bad back and not very mobile anymore. I have a car at the minute and will keep it but would ideally like a van for transporting things for the farm. I’d be the main user but we were hoping to buy it in my fathers name so we can make use of the commercial aspect. How do we go about that? I would give him the money for the van with the plan of him giving it back as the tax write downs come through... how can I make sure it doesn’t end up costing him anything? Is there a better way of going about this? Any suggestions would be appreciated

Bass Reeves

Del2005 wrote: »

And when he's over at a friend's house or anywhere other than the mart/Co op what's the business use?

Any commercial insurance policy I had for the van that was for he farm had social and domestic use on it. The car tax is commercial only but a lot of small vans may be as easy to Tax privately now. Its mainly jeeps where the difference in tax is between private and commercial.

Bass Reeves

SamM65 wrote: »

Hi all,

It’s the son posting here. I think my father has confused the situation. I’m looking at buying a van, the farm was left to my father and it doesn’t really run much of a profit. In truth I probably do as much if not more on it than him as he has a bad back and not very mobile anymore. I have a car at the minute and will keep it but would ideally like a van for transporting things for the farm. I’d be the main user but we were hoping to buy it in my fathers name so we can make use of the commercial aspect. How do we go about that? I would give him the money for the van with the plan of him giving it back as the tax write downs come through... how can I make sure it doesn’t end up costing him anything? Is there a better way of going about this? Any suggestions would be appreciated

I would not get too hooked up on the commercial aspect. Is he recording much of a profit or loss at present. Has he being doing accounts since he got it. I presume you are intending to buy a small van like a Caddy, Berlingo or Peugot partner.

caddy has probably the higher towing capacity not that it very high around 1.5T braked. As it will not be used much I keep the spend low. As its commercial insurance usually they do no penalize as much on age as cars. I saw this on DD just now

https://www.donedeal.ie/commercials-for-sale/vw-caddy-2008/27901739



just saw his on DD. What ever you buy do a bit of research first on cost of insurance. Try the broker's as well as the insurance companies. Remember it will be next years accounts before he sees any tax difference.

Base price

Bass Reeves wrote: »

Any commercial insurance policy I had for the van that was for he farm had social and domestic use on it. The car tax is commercial only but a lot of small vans may be as easy to Tax privately now. Its mainly jeeps where the difference in tax is between private and commercial.

Same here, even the lorries have it which is handy when you buy something large like furniture for the house so you can collect it.

SamM65

Bass Reeves wrote: »

I would not get too hooked up on the commercial aspect. Is he recording much of a profit or loss at present. Has he being doing accounts since he got it. I presume you are intending to buy a small van like a Caddy, Berlingo or Peugot partner.

caddy has probably the higher towing capacity not that it very high around 1.5T braked. As it will not be used much I keep the spend low. As its commercial insurance usually they do no penalize as much on age as cars. I saw this on DD just now

https://www.donedeal.ie/commercials-for-sale/vw-caddy-2008/27901739



just saw his on DD. What ever you buy do a bit of research first on cost of insurance. Try the broker's as well as the insurance companies. Remember it will be next years accounts before he sees any tax difference.

He inherited the farm 2 years ago and hasn’t done any accounts yet, the plan is to engage an accountant in the next few weeks. It’s only a small farm but before paying tax on it it’s made roughly 3k a year. He also has another job where his earnings are roughly 40k. If a jeep worth 10k was purchased, how would that be calculated against his income? Would it make more sense to buy a cheaper jeep or does it matter as the full value can be written off over 7 years?

Mooooo

Better off talking to the accountant about it, farm investment may lead to a loss on the farm which can be put against paye tax. Decide what ye want to do re farm etc and ask the accountant best way to go about it

SamM65

Mooooo wrote: »

Better off talking to the accountant about it, farm investment may lead to a loss on the farm which can be put against paye tax. Decide what ye want to do re farm etc and ask the accountant best way to go about it

Thanks, would that mean me getting a jeep will cost him more or make more sense for him if it’s against his paye? How would my father know what exact relief he’s receiving towards the jeep specifically?

RedDevil55

SamM65 wrote: »

Thanks, would that mean me getting a jeep will cost him more or make more sense for him if it’s against his paye? How would my father know what exact relief he’s receiving towards the jeep specifically?

If your father's off farm income is 40k, I assume he'll pay the higher rate of tax on any farm profits. This may not be the case if his spouse is on a low income.

Whatever vehicle is bought, he'll get the tax relief over 8 years. To make it simple we'll say you spend 8k on van or jeep. So he'll claim 1k tax relief for 8 years. Normally he'd pay around 48% tax on that 1k - €480. So that's the amount of tax he's saving for 8 years.

If your father is on lower rate of tax it would be 28% roughly. So €280 tax per year for 8 years is being saved.

SamM65

RedDevil55 wrote: »

If your father's off farm income is 40k, I assume he'll pay the higher rate of tax on any farm profits. This may not be the case if his spouse is on a low income.

Whatever vehicle is bought, he'll get the tax relief over 8 years. To make it simple we'll say you spend 8k on van or jeep. So he'll claim 1k tax relief for 8 years. Normally he'd pay around 48% tax on that 1k - €480. So that's the amount of tax he's saving for 8 years.

If your father is on lower rate of tax it would be 28% roughly. So €280 tax per year for 8 years is being saved.

Ah ok, for some reason I was under the impression that he would get the entire 8k back through tax relief.

Dinzee Conlee

SamM65 wrote: »

Ah ok, for some reason I was under the impression that he would get the entire 8k back through tax relief.

A few people have said you should talk to an accountant...

Not trying to be smart, but the more this goes on, I think the more apparent its becoming that you need this chat...

Before you spend any money on anything, find a good accountant and chat with them. Get an understanding on how things work, what you can claim, capital expenditure, VAT returns, depreciation, etc...

I think it would be money well spent.