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Farm Partnership vs Company

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  • 06-05-2021 10:19pm
    #1
    PaidV
    Registered Users Posts: 71 ✭✭


    Hi all

    Was hoping someone could offer me advice on the above.

    Background:
    Myself and my parent are in a farm partnership (medium sized suckler enterprise). I have a 20% share.
    I work off the farm and am in the higher tax bracket.
    At present I get taxed at the higher rate on my 20% share of the partnerships profits each year which is costing me roughly 2.5k per year, I don't actually take any funds out of the farm business.

    At present my father is looking to transfer the land to me as part of our succession planning. Aware there will be a 1% stamp duty chare payable on assets transferred.

    Is there any case to be made for moving to a company structure? That way I would not be hit with the tax each year if I do not draw out of the business. (other than the 12.5% Corp tax)

    Would there be any impact on the transfer of the land to myself if we moved to a company structure, not sure what is the best approach.

    Also worth noting the farm accountant has quoted a 4k fee for setting uk the company, transferring the assets into the company and notifying the dept of ag etc.

    Any thoughts or advice would be welcome.

    Thanks


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    #2
    HcksawJimDuggan
    Registered Users Posts: 394 ✭✭HcksawJimDuggan


    PaidV wrote: »
    Hi all

    Was hoping someone could offer me advice on the above.

    Background:
    Myself and my parent are in a farm partnership (medium sized suckler enterprise). I have a 20% share.
    I work off the farm and am in the higher tax bracket.
    At present I get taxed at the higher rate on my 20% share of the partnerships profits each year which is costing me roughly 2.5k per year, I don't actually take any funds out of the farm business.

    At present my father is looking to transfer the land to me as part of our succession planning. Aware there will be a 1% stamp duty chare payable on assets transferred.

    Is there any case to be made for moving to a company structure? That way I would not be hit with the tax each year if I do not draw out of the business. (other than the 12.5% Corp tax)

    Would there be any impact on the transfer of the land to myself if we moved to a company structure, not sure what is the best approach.

    Also worth noting the farm accountant has quoted a 4k fee for setting uk the company, transferring the assets into the company and notifying the dept of ag etc.

    Any thoughts or advice would be welcome.

    Thanks

    Alot of things to consider here and it can be an absolute minefield.

    Will you be claiming Agricultural Relief for CAT purposes? If so, I know there are restrictions on you holding onto the land for a period of 6 years after the land is transferred. I’m not sure if by leasing the land to your own company would continue to satisfy this condition but a subsequent transfer to a limited company within 6 years is definetly off the cards.

    Are you under 40 and have you an ag qualification? If so, have you looked into the succession farm partnership? It can result in an extra tax credit of €5,000 per year (€1,000 would be allocated to you based on your 20% share in profits)


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    #3
    PaidV
    Registered Users Posts: 71 ✭✭PaidV


    HcksawJimDuggan wrote: »
    Alot of things to consider here and it can be an absolute minefield.

    Will you be claiming Agricultural Relief for CAT purposes? If so, I know there are restrictions on you holding onto the land for a period of 6 years after the land is transferred. I’m not sure if by leasing the land to your own company would continue to satisfy this condition but a subsequent transfer to a limited company within 6 years is definetly off the cards.

    Are you under 40 and have you an ag qualification? If so, have you looked into the succession farm partnership? It can result in an extra tax credit of €5,000 per year (€1,000 would be allocated to you based on your 20% share in profits)

    Hi, thanks for your reply. Yes I would be looking to utilise the agricultural relief. I am 36 and have the green cert done. I actually hadn't heard of the succession farm partnership. Will def look into that.

    Yes there seems to be a lot to consider so I'm really cautious about where to go from here.


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    #4
    Stratvs
    Registered Users Posts: 958 ✭✭✭Stratvs


    As other poster said it is a minefield. Recently I attended 2 webinars given by an expert in farm structures and succession. I thought I knew quite a bit about this from my years in practice but I realised then how much more there is to this. You’re hopefully going to be farming for many years and getting this right now is so important. Having an accountant on board who is experienced in farm succession and structures is paramount. Cost while relevant is secondary to getting it done right.


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