With this year’s budget eagerly anticipated, the Minister for Agriculture, Food and the Marine announced an increase of spending of 11% (179m) for Irish agriculture for 2021 compared to 2020.
He confirmed that his Department is extending existing Rural Development Programme (RDP) schemes including: Areas Facing Natural Constraints (ANC), Green Low-carbon Agri-environment Scheme (GLAS), Beef Data & Genomics Programme (BDGP), Sheep Welfare Scheme (SWS), Organic Farming Scheme (OFS), Burren Programme, support for setting up Beef Producer Organisations (BPOs), Targeted Advisor Service for Animal Health (TASAH), GLAS Traditional Farm Buildings (GTFB) and Collaborative Farming.
The Department will seek formal approval from the Commission for the adjustment to the duration of the existing RDP schemes, in line with EU rules over the coming months.
- Farm Consolidation Relief – stamp duty relief (reduced rate of 1%) for the consolidation of farm holdings is being extended for an additional two years to end of December 2020, aligning the end date with equivalent Capital Gains Tax relief.
- Consanguinity Relief – reduced Stamp Duty rate of 1% applies to transfers of farmland between certain blood relatives. This relief is being extended to end December 2023
- Residential Development Refund scheme – Stamp duty refund for land that is developed for residential purposes. The time allowed to commence construction work is being extended to 31st December 2020 and the time allowed (after approval by local authority of commencement) to complete the development is being extended from 24 months to 30 months.
- The flat rate VAT for farmers is being increased from 5.4% to 5.6% from 1st January 2021.
Carbon Tax/Motor Tax/VRT
- Carbon tax charge went from €26 to €33.50 per tonne and was applied to auto fuels from 14th October and will apply to all other fuels (including green diesel and home heating oil) from 1 May next, adding approximately5c/l to a litre of auto diesel and 1.937c/l to the cost of green diesel.
- The carbon tax will continue to increase by €7.50/t per year up to 2029 and by €6.50/t in 2030 with the aim of eventually costing €100/t.
- Changes to VRT for passenger vehicles from 1st January 2021 – VRT will now be based on the CO2 emissions produced under the WLTP measuring system.
- A third motor tax system will be introduced from January 1st, 2021 to take into account the altered CO2 figures due to use of the WLTP (Worldwide Harmonised Light Vehicle Test Procedure) measuring system. It will apply to cars purchased from that date. The other two systems apply to cars purchased pre 2008 (based on engine size) and 2009-2020 (based on NEDC CO2 emissions figures). Minor changes will apply to the existing rate table for cars taxed on NEDC CO2 emissions, no change to cars taxed on engine size.
- Relief for VRT for hybrid and plug-in hybrid vehicles will expire on 31st December 2020 and VRT relief for Electric vehicles will be reduced.
- A new VRT structure of rates and bands will apply from 1st January 2020 based on the WLTP.
- No changes to tax rates or bands.
- USC band 2% ceiling band change from E20,484 to E20,687 to keep minimum wage earners out of top-rate USC, impact is additional E5.00 per annum
- Earned income credit for self-employed to increase from E1500.00 to E1650.00 per year to bring self-employed tax credits in line with PAYE workers, additional E150.00 per annum
- Reduced rate of USC for medical card holders extended for another year
- Dependent relative tax credit to increase from 70.00 to 245.00 per annum
- Employer PRSI weekly income threshold for higher rate of PRSI to increase from 394 to 398.
- Accelerated capital allowances for Energy Efficient Equipment is extended until end December 2023.
- Remote working tax credits for broadband and vouched expenses – further information available from Revenue shortly
- Over €221 million funding announced for residential and community retrofit schemes. Of this allocation, €109 million is provided to support lower income households to retrofit their homes
- An earnings threshold of €480 per month will be introduced for self-employed people getting PUPto allow them to take up occasional work opportunities and keep their PUP.
- The qualifying age for a State pension will continue to be 66, it was to have changed to 67.
- E300M for Brexit
The information above is a summary of the measures relevant to the agri-sector in Budget 2021 and is subject to the relevant legislation being enacted.
If you are affected by or are considering availing of any of the measures above, we recommend contacting your agricultural advisor, accountant, or tax advisor to ensure you meet all the qualifying criteria.