Suckler and beef farmers across the country are being advised to start managing their tax cashflow now, ahead of autumn tax bills.

An ifac review of 2024 figures to date - and projections for 2025 - shows the majority of suckler and beef farmers across the country will not only have larger income tax bills than normal, but, in some cases, significant tax bills.

This is on the back of higher than ever before mart and factory prices.

Ifac partner and Sligo suckler farmer Trevor Boland said that farmers now need to be aware of what their farm profits are for 2024, what tax is payable on these profits and, perhaps more importantly, what the likely farm income is going to be for 2025.

Cashflow

"For farmers looking at 2024 figures and their expected income for 2025, there are possibilities to reduce income tax bills, invest in the farm for the future and make the farm a safer place to live and work.

"With tax to pay in October, managing tax cashflow is incredibly important, so they need to get working, get their tax figure and understand their options,” he said.

Stock relief

Stock relief is available on the increase in the value of stock on the farm at the year end compared with the previous year.

In summary, Revenue will give farmers an allowance of 25%, 50% or 100% of the increase in stock value. The value of the relief depends on whether the farmer is a young, trained farmer and the type of structure of ownership.

Up to now, stock values have generally rolled over year to year, with little change in values.

With the average suckler cow now worth over €2,000 in cull value - a big increase on previous years - it is time to review stock values and take advantage of stock relief.

By reviewing stock values at the end of 2024, adjustments can be made to bring values up to date in the accounts, which may result in profits on the farm being spread between two years.

This applies across all categories of animals on the farm and particularly applies to animals sold early in the year, where the sales value is known before the previous year’s accounts are complete and can be incorporated into the final figures.

All calves, weanlings, store cattle and finishing animals should be valued at 60% of market value at year end.

Family wages

Across farms, there are children, uncles, aunts, parents, cousins, nephews and nieces involved in working on the farm, helping in the office or with a share in a favourite cow or heifer on the farm. Most of the time these family members are unpaid help.

These family members often go unrewarded, but when there is a bit left over, it can be spread around, which also helps reduce your tax bill.

To comply with PAYE modernisation rules, these family members need to be put on the payroll this year and a wage paid to their bank account and reported to Revenue.

Any wages paid to children can be used to pay college fees and accommodation in the future, if required, thereby saving on the double.

Income averaging

Use income averaging where appropriate. Income averaging allows farmers to pay tax based on the average of five years' farming profits and losses.

This means that one-fifth of the profits for five years is charged to tax for the year. Remember, this is kicking the tax bill down the road for the next four years, but if additional capital allowances are coming on board in the future, income averaging may suit the farm.

Rather than having a large tax bill in 2024 or 2025, averaging allows this income to be spread over five years, thereby reducing immediate cashflow pressures for income tax and preliminary tax liabilities.

However, if profits continue to rise in 2026, each year the tax bill will grow - therefore, careful planning is needed.

Pension contributions

Pension contributions are a great way to reduce tax liabilities, reduce preliminary tax and put money away to provide a future income in retirement.

While a lot of farmers have made provision through a private pension fund, many are not contributing enough or making use of the maximum contribution limits.

According to the ifac annual farm report, one in five farmers cannot afford to retire as the farm cannot support two generations working it at once.

This is an opportunity to take the time to review current pension provisions, review employment pensions and discuss with your financial adviser opportunities to take some profits, invest in your pension and save tax.

A review should also be carried out for spouses and where additional cashflow is available, consider increasing spouses' pension contributions.

Pensions need to be targeted at the 40% rate of marginal tax, as someday they will be drawn down and best not to pay USC on them twice.

Facilities and safety improvements

Investing in the farm by using additional profits generated can make the farm more profitable in the future, a safer place to work and more efficient for one person to manage when labour is short.

Improving handling facilities, calving facilities, yard lighting, gates and barriers to make the farm safer - there is no point in having the best herd of cows or beef bullocks if you are unable to work them due to injury or worse.

Expenses incurred will reduce the tax bills and make the farm safer and easier to run in the future.

TAMS grants are available for most items and accelerated capital allowances are also available, but start planning now to get TAMS applications into the Department of Agriculture and have approval and expense incurred in the year 2025.

Also, slurry storage requirements should be reviewed to establish what investment might be required in the future to comply with regulatory requirements.