Agrifood and Budget 2020: what you should know

Oct 13, 2019

 

By Declan McEvoy

In light of recent Brexit activity, and the threat of a no-deal, the Government has specifically ring-fenced €110 million for the exposed agri-food sector in Budget 2020, with specific conditional investment supports attached to the funding:

  • €85 million for beef farmers;
  • €14 million for fisheries;
  • €6 million for the livestock and mushroom sectors; and
  • €5 million for the food and drinks processing industry. 

There was also an increase of €1.6 million in Bord Bia's budget to market beef and sheep meat.

There are a few other things accountants should know when assisting their clients in agriculture.

Farm schemes

Existing farm schemes were rolled over but there was a €3 million fund earmarked for pilot environmental agri-schemes. These environmental schemes still have to be worked out but are climate action-related and so funded out of the carbon tax fund.

The Targeted Area Measure Scheme (TAMS) budget for on-farm capital investment has an increased funding of €12.1 million, granting aid to 5,800 farmers. While, in forestry, €103.5 million has been allocated to forestry planting premium to support an additional 8,000 hectares of new planting and the construction of 125 kilometres of forest roads.

Taxes

Budget 2020 didn’t just see the Minister giving money away, but impose taxes on the sector, as well.

Stamp duty

There is an increase in stamp duty to 7.5%. However, there was no mention of consanguinity relief, which is due to end next year.

Restructuring relief

The current relief available for farmers for consolidation of farm holdings has been extended to 2022. This capital gains tax measure allows a farmer to dispose of a holding and purchase a holding nearer to his or her base to consolidate the farm. 

Income tax changes

No different from other sectors, the €150 increase in the earned income credit applies and the €100 increase in the home carer credit applies, as well.

Carbon tax

The big buzz in the budget was around carbon tax and the increase of €6 per tonne, applying to all carbon-based fuels, and adding approximately €0.02 a litre to agri-diesel. However, because agri-diesel is considered a marked gas/oil, this effect will not take place until 1 April 2020. This carbon tax will come at a great cost to agri-contractors and farming, in general.

Succession planning

In regards to succession, the Budget has changed the threshold for Category A Parent to Child, from €320,000 to €335,000. It’s a small but welcome change. For the agri-food specifically, the extension/widening of the Keep Employee Engagement Programme (KEEP) scheme, Employment and Investment Incentive scheme (EIIS), and the changes to research and development should benefit the sector.

Brexit

As the Budget was set against the background of a no-deal Brexit, the level of funding will have to be monitored. As with everything, the impact of a no-deal Brexit cannot be measured until it happens, and a quick response will be necessary once it does. 

Declan McEvoy is the Head of Tax and a Partner at ifac accountants.