20pc increase in tax bills 'knock farmers sideways'
Large increases in tax bills caused consternation in farming households last week as dairy and beef operations struggled to come to terms with tax increases of up to 20pc.
Despite the dreadful conditions that prevailed last winter, thousands of farmers faced significant increases in their tax returns. Dairty farmers milking 80-100 cows had tax bills averaging €25,000-35,000.
The hikes were due to a combination of strong output prices and the end of capital expenditure reliefs for buildings erected during the Farm Waste Management scheme.
And tax bills are set to take another jump next year, according to IFAC's senior tax consultant, Declan McEvoy.
"A lot of dairy farmers have made as much in the first nine months of 2013 as they did in the whole of 2012," said Mr McEvoy.
He attributed the dramatic surge in farm profitability to record milk prices. However the improved cash flow on dairy farms did not prepare many farmers for tax bills that increased by €5,000-10,000 ahead of last week's deadline.
"There was a misconception that profits were going to be back in 2012 because of the weather. But cattle prices were very strong in the first half of 2012," commented Mr McEvoy, whose firm handles accounts for over 14,000 farmers.
"What really caught guys out though was the end of the capital allowances that had suppressed their tax bills over the last five years. That, coupled with the impact of the Universal Social Charge (USC), resulted in a big increase in tax, even where income was the same," he said.