BUDGET 2021 was delivered by the joint ministerial team on Tuesday October 13th. Set against the background of Covid-19, Brexit and a slowing world economy the government parties have to be given credit for thing to deal with most situations.

A number of headline items that were not highlighted around the Budget which are important in a budget which was different to all others.

1. Minister for Finance Paschal Donohoe promised the continuation of VAT at 21% up to February 28th.

2. There was no change in the Capital Gains Tax (CGT) rates or Gift of Inheritance Tax rates or thresholds.

3. Entrepreneur Relief is now being made more favourable to the person actively involved in the business and ensures the 10% (CGT) rate.

4. Pension Review Group is being set up which is keeping the pension age at 66 for the moment.

5. There is a review of tax system to take place and a new commission to report. Changes will be on the way to the tax system from this and will be worthwhile to watch.

6. The Employment Wage Support Subsidy is being extended to December 31st 2021.

Since the Budget there has been the announcement of the increase to Level 5 for the country and consequently the Pandemic Unemployment Payment of €350 per week has been re-introduced for those effected. There are now five bands for this and this will be relevant to anyone whose business is impacted.

7. For the agriculture and the bloodstock sector, particularly around the issue of transfer of farmland a number of important reliefs took place:

  • Consanguinity relief – This is a relief between blood relatives to give the 1% rate of stamp duty. This was due to expire on December 31st 2020 but it has now been extended to December 31st 2023. Part of the working papers with the Budget refer to a possible upper age limit being introduced in the Finance Bill 2021. So should you be in a position to be able to transfer property please consider doing so before this time next year to avail of this 1% stamp duty.
  • Farm Consolidation Relief was due to end December 31st 2020 for stamp duty. This has now been extended to December 31st 2022. This is good as it now aligns it with the CGT consolidation relief. Basically, consolidation relief allows you to dispose of a piece of land farther away from you, buy a portion of land near you and avoid CGT and stamp duty on the re-investment of the same amount of money. As they are now both aligned they have the potential to have much greater impact. The big requirement is that one has to get a Restructuring Cert from Teagasc on to qualify.
  • Further developments took place in that the Residential Stamp Duty Refund Scheme has now been extended to December 31st 2022.

    As a farmer or bloodstock breeder, if you dispose of a site or transfer a site to a family member for the building of a site or a house or someone else for the building of their main residence,whilst they pay the full rate of stamp duty initially they can get a refund which means an effective stamp duty rate at 2% – another positive development.

    • 8. The big ticket item arose around and a surprise came in that the Farmers Flat Rate VAT edition increased to 5.6%. This was a good, positive move.

    For the bloodstock sector, another possible positive is that 9% VAT rate is being re-introduced.

    This will form part of the Finance Bill and we will wait for further details in this to see what is included and see if bloodstock involved in the activity sector like trekking, etc. is included.

    9. Climate change was a big part of the Budget and what has happened is as follows:

  • Accelerated capital allowances for energy efficient equipment has been extended for another three years.
  • Work from home incentives have been expanded and loosened to allow people to work from home. Whilst this may not be dramatically beneficial on first thoughts in the bloodstock industry, if you have someone who is working as an office administrator etc. why not consider this as an option for them?
  • Retrofit Scheme for older homes – €100 million has been introduced from the carbon tax to fund same.
  • However, in motor tax there are VRT changes which will make vehicles more expensive and there is also a third band introduced for vehicles for motor taxation which are registered from January 1st 2021.
  • Increase in cost of agricultural and road diesel will have an impact. The move has now started to make cars more expensive and in increasing carbon tax, it will make it more expensive to drive and do business. The Budget needs to factor in some relief for the agriculture and bloodstock sector in carbon tax as they are heavy users of carbon with very little reliefs.

    • 10. Further reliefs have been announced and extended.

    11. A Covid-19 Restriction Report Scheme where your business is down by 80% will run from October 13th to March 31st. You can claim back funds from Revenue for this.

    12. Tax Warehousing – If your business has been affected by Covid-19 there is a 0% interest rate for 12 months on unpaid taxes and 3% thereafter. This will include preliminary tax and the Wage Subsidy Support Scheme. Again positive developments for those whose businesses have been affected.

    13. The other positive development and it is stated as part of the Budget is the Corporation Tax Rate will remain at 12.5%.

    There are some other fundamental changes announced around the Budget and they can be summarised as follows

  • The reduced rate of USC for medical card holders is to remain in place.
  • There is extra third level grant funding available.
  • The Christmas bonus will extend to those on Pandemic Unemployment Payment and they will also be able to earn some money casually.

    • All in all a positive Budget that will have benefited the bloodstock sector the same as every other sector. The Budget is trying to keep money in the hands of the productive sector of the economy.