Farm Business Council Report November 2021

Budget 2022 Summary 

Budget 2022 was announced on 12^th October and discussed at the IFA Council meeting on Thursday 14^th in Portlaoise 

Key features relating directly to agriculture in Budget 2022 include: 

• €872m in funding for Rural Development and Forestry supports, including:
  • supports for the beef and sheep sectors including BDGP, BEEP-S, Sheep Welfare Scheme, ANC and Dairy Calf Programme
  • € 80m for on farm investments through TAMS including specific supports for solar energy installation.
• €21m to support organic farming.
• €4m for the establishment of a Food Ombudsman’s Office
• Grant aid to support the planting of multi species swards.
• €15m for the continuation of the soil sampling scheme.
• An additional €2m to support farm safety initiatives.

Carbon Tax Redirected

• The Programme for Government gave a commitment to allocate €1.5bn carbon tax receipts to agriculture over the 2021 – 2030 period. 
• However, €49m of 2022 carbon tax receipts initially allocated to agriculture, has now been reallocated to the Department of Social Protection.

Rural and Community Development

• An additional €4m has been allocated to Leader to help support the economic and social development of rural areas and the offshore islands, and to contribute to regionally balanced development.
• Additional funding of €1.5m has been allocated to CLÁR and €2m to the Walks Scheme.

Heritage

€120 million is allocated to conserve and manage Ireland’s heritage. While specific allocations are not outlined, nevertheless farmers will partly benefit through delivery of conservation projects under LIFE and other funding instruments. Also included is an expanded NPWS Farm Plan programme, bog restoration and conservation of protected peatlands, including raised bog compensation schemes.

Young Trained Farmers (stamp duty) 

Young Trained Farmers (<35 years old) stamp duty relief is extended until end of 2022. This is the furthest this can be extended, but the Department of Agriculture, Food and the Marine are positive that EU State Aid rules will allow the reliefs to be extended again in Budget 2023.

Stock Relief

• Stock relief extended for a further 3 years at a rate of 25%.
• Partnership stock relief at 50% and Young Farmer stock relief at 100% is extended until end of 2022. 

Zoned Land Tax 

• Land which is zoned suitable for residential development and has not been developed, will be subject to a new tax at 3% of market value.
• 2 to 3-year lead in time to introduction depending on zoning date. 
• Replaces the current vacant tax levy.  

The IFA have a submission to the Department of Finance outlining the need to remove all agriculture land from this Zoned Land Tax.

Corporate Taxation

• No change for farms operating as companies, with tax rate remaining at 12.5%.
• The increase to 15% is only for large turnover global corporations.

VAT Flat Rate Addition

• In Budget 2022, the VAT Flat Rate Addition has been decreased by 0.1% from 5.6% to 5.5%

Income Tax & Universal Social Charge (USC)

• The Earned Income and Personal Tax Credit for self-employed tax payers, including farmers, has been increased by €50 to €1,700.
• An increase of €1,500 in the income tax standard rate band for all earners to €36,800.
• The ceiling of the second USC rate band will be increased by €608 to €21,295 (keeps minimum wage workers out of the higher USC band). 

Carbon Tax 

• Carbon tax will be increased by €7.50/tonne to €41/tonne from midnight 13^th October 2021. 
• Increase on agri diesel, kerosene, natural gas and LPG from 1^st May 2022.
• This will add an extra 2c to the cost of a litre of agri-diesel from next May.

Welfare Payments

• Farm Assist
• Increase in weekly rate of payment by €5 per week
• Qualifying adult rates also increasing by €3.30 to €138. 
• The rate for children under 12 will be increased by €2 to €40. For children over 12 it will be increased by €3 to €48. 
• The list of agri-environmental schemes that attract a disregard under the farm assist scheme is to be amended.

Low-Cost Finance 

The SBCI Brexit Impact Loan Scheme (BILS) is designed to fund working capital and investments for eligible Irish businesses, including primary producers (Agriculture/Fishing), impacted by Brexit and Covid-19.

The Scheme is available until 31 December 2021 or until it has been fully subscribed.

Applying

Loan Purpose:

• Farm working capital and investment loans
• refinancing of existing SBCI Brexit Loan Scheme facilities
• refinancing of a non SBCI Brexit loans (in certain criteria)

Loan Features:

• Loan amounts from €25,000 to a maximum of €1,500,000 per borrower 
• Loan terms of between 1 year up to 6 years 
• Loans are unsecured up to €500,000.
• Amounts >€500,000 need to be secured
• Optional interest-only repayments or interest and / or capital moratoria (up to 90 days) are possible under the Scheme. 

The interest rate applicable to the loan will depend on the finance provider chosen.

• Bank of Ireland:
  • 2.95% <€250,000;
  • 2.50% >€250,000.
• Other finance providers will apply a minimum discount of 1% on their standard comparable rate for a non-BILS debt product.

Ulster Bank 

IFA have requested a high-level meeting with Ulster bank to seek clarity on their future plans for their farm family customers. 

IFA Debt Support Service

The DDS continues to work for family farms that have financial difficulties. 

Unfortunately, many contacts made through the IFA DSS line are at the final stages of receivership and can be challenging in terms of getting debt restructured or refinancing. Please urge IFA members to act early with their lenders if they experiencing financial difficulties and to contact the IFA debt support service as soon as they foresee issues arising. Progress on individual cases is extremely difficult once legal proceedings have started or a receiver has been appointed.