Tax man: Light relief on tax rates
Stock relief runs out at the end of next month. In the 1980s it applied to several industries, but the IFA managed to hold on to it in a different form for farming. Like so many other measures, there is no certainty that it will remain in place in the upcoming Budget. Therefore, it makes sense to make the most of this relief this year if appropriate.
What is stock?
From a farming point of view, it is seed and fertiliser, harvested crops, livestock and poultry. Growing crops do not count.
How is stock normally handled in my accounts?
For tax purposes, cattle are generally valued at 60pc of their market value in your accounts. Sheep, pigs and harvested crops are valued at 75pc of their market value. This is important if you are availing of stock relief at either the standard 25pc rate or the 100pc rate for depopulations and young farmers.
How does stock relief normally work?
Where the value of stock at the end of the accounting year is greater than the value of the stock at the beginning of the year, the profit is reduced by 25pc of the increase in value. If the stock value decreases, there is no claw back (see table 1).
When does 100pc relief apply?