Budget 2025 introduces several key measures to support farmers and the agricultural sector, while also addressing national priorities like sustainability and the rising cost of living. Here’s a breakdown of the most important changes from an Irish farming perspective, with a focus on the latest updates to farm tax reliefs and environmental measures.
Tax Reliefs for Farmers
Stock Relief Extended: Stock relief, a critical measure for managing fluctuating stock values, has been extended to 2027. This will help farmers reduce their tax liabilities and maintain cash flow, which is especially important in a sector where income can vary significantly.
Farm Safety Equipment Relief: The government has broadened the range of farm safety equipment that qualifies for tax relief. Farmers now have greater flexibility in purchasing safety equipment, which is essential for reducing accidents and ensuring safer farm operations.
Capital Gains Tax (CGT) Relief for Angel Investors: Although primarily aimed at business investment, farmers involved in agri-businesses or agricultural innovation may benefit from a new CGT relief for angel investors. This provides a reduced CGT rate for gains up to a lifetime limit of €10 million, encouraging investment in innovative farming practices.
Flat Rate VAT Increase for Farmers
Flat Rate Increase: From 2025, the flat rate for farmers will increase from 4.8% to 5.1%. This will help non-VAT-registered farmers recoup a higher amount on sales, partially offsetting rising operational costs such as fuel, fertilisers, and other essential inputs. This increase aims to ease the financial burden on farmers, especially those with smaller or medium-sized operations who may not be VAT registered but face rising input costs.
Support for Landowners and Housing Measures
Pre-Letting Expenses Relief for Landlords: Farmers who own additional residential properties and let them out will benefit from an extension of the pre-letting expenses relief for another three years. This can help offset the costs of bringing vacant properties back into use, which is particularly valuable for rural landlords.
Help to Buy Scheme: The Help to Buy scheme, a key support for first-time buyers, has been extended until the end of 2029. Farmers' family members looking to enter the property market for the first time can take advantage of this for a few more years.
Vacant Home Tax Increase: The Vacant Home Tax has been increased from 5 to 7 times the Local Property Tax rate, incentivising property owners to bring vacant homes back into use, which could impact landowners with unused residential properties.
Environmental and Climate Measures
Carbon Tax Increase: The carbon tax on petrol and diesel will increase from €56 to €63.50 per tonne starting in October 2024. While this is designed to encourage the transition to cleaner energy, it will increase costs for farmers who rely on fuel for machinery and transport. Farmers will need to plan ahead for the potential rise in fuel costs, which could impact overall farm profitability.
Support for Green Initiatives: Though not extensively detailed in the Budget, ongoing government support for sustainable farming practices and investment in renewable energy technologies is expected to continue. This includes grants for green farming initiatives and transitioning to more environmentally friendly methods of production.
Social Welfare Supports for Farming Families
Social Welfare Increases: A €12 weekly increase for working-age social welfare recipients and pensioners will benefit farming families with elderly or working-age members receiving payments.
Energy Credit: A one-off €125 electricity credit, paid in two instalments, will help farming households manage rising energy costs. This is crucial given the high energy usage in many agricultural operations.
Child Benefit: Families will benefit from a double child benefit payment in one month, a welcome boost for farming households with children, particularly during high-expense periods.
Minimum Wage Increase
Minimum Wage: The national minimum wage will increase by 80c to €13.50 per hour. Farmers employing staff should be aware of this rise, which may increase labour costs. However, it could also help attract and retain workers, particularly in a sector where skilled labour is vital.
Final Thoughts for Farmers
Budget 2025 delivers a mixture of support and challenges for the agricultural sector. The increase in the flat rate VAT from 4.8% to 5.1% is a positive change, helping non-VAT-registered farmers recoup more on their sales. However, rising carbon taxes and minimum wage increases may add to operational costs. Farmers should carefully assess how these changes will impact their cash flow and plan for both immediate and long-term effects. The focus on innovation, safety, and sustainability highlights the government’s commitment to the future of Irish agriculture.
