TAX

Company can be set up in a week/ten days. Setting up the bank account in the company name will probably take longer to be honest.

Remember if you incorporate the money is no longer yours. Its now company money

You will pay 15% tax to any profits in an incorporated company and the accountant will be more expensive as they will charge you for both sets of accounts you personal accounts and your company accounts.

On your farm profits of 25 k you now pay 13k. in the new senario you will pay 3750 euro plus another 6-700 extra in accountancy fees minimums maybe even a tad more. There will be extra costs as well such as if you register a child as an employee.

Remember this may only be a short term issue if you have children they will be available when they get to 14/15 to use up tax issues. While you can employee them through the company as well and before paying tax on profits the benefit of incorporation is not as noticeable.

The main advantage of incorporation is if you want to buy land down the line or carry out other investment, however if you want to access the money you still have a tax issue but you have already paid 15% on it and now have personnel tax again. You could have a couple of 100k in the farm account and have no real use within the company for it and accessing it outside the company will see 50% go to the tax man.

Pension contributions for yourself or spouse should be done before incorporation as well

I am semi retired and I have postponed drying my pension as I am using all tax allowances for farm/rental profits.

Over the next couple of years some of the spending will be more lifestyle choices rather than paying tax.

You can sell in buildings to increase your directors loan but you will have to pay stamp duty on the sale, so short term pain for a long term gain. On not incorporating because you have capital allowances left I wouldn't agree, we did the sums here and bottom line was even after including capital allowances it still made financial sense to incorporate, and especially for dairy farmers I would think they will be exorbitant tax bills next year. Its not as if one won't ever build again, if anything you will have more cash on hand to consider such projects.

There will be a lot of people incorporating over the next year or so if milk price stays high and people realise the tax bills they are facing. Its kind of obvious that a person will consult an accountant to discuss the best options, but talking it over with people who have already gone that route be it on the Internet or a discussion group etc is a good first step even if to give you an idea of what you should be asking your accountant.

Ya but if you want to take 50k out to give to a child or want money for investment outside the company. Yes you can get investment put into the company back out but drawing can be at a significant cost. A lot depends on if the spouse is working off farm.

You said about building going in and drawing back the investment. The disadvantages are these are also around the house. If the company ever went bankrupt then you could have another farmer milking cows in your yard

Well if you cannot understand my point we will leave it at that

There is a good few out there that would be but have nice shiny tractors, livestock boxes and landcruisers.

Saw a factor agent that has bought a new jeep lately, he went up 10 years. I suspect that it's taxation issues. I bet you he has no pension fund.

I seen a work maybe go and spend nearly 30k on a tractor ten years ago because he had a tax issue. He only told me afterwards. I explained to him about employing children he never knew about that.

Some accountants ( especially smaller sole accountants) can be very poor or reluctant with tax advice. Most farmers are not the most astute business people.

While you need to get an accountant to tailor your particular situation it's the different available options or long term outlook that you get here that often may not be available from an accountant.

Just bought a new jeep last year. Full capital allowance over the next 8 years. All diesel and running costs are farm expense.

The wife's car doesn't come near the farm accounts.

Do you end up paying the same amount of tax over a long period anyway? For example if you put a lump sum into pension in a good year to reduce income tax will you pay that tax when you retire and draw down the pension? Surely Revenue dont let money slip through the net or is company tax low just to entice multinationals and farmers piggyback on that ?

The jeep would still be worth that after 8 years

You have to understand pensions. Ideally you look at them longterm you are getting tax free gain for all those years. There is a few thing to remember. When your kids finish college you will tend to have a lot of excess income you can put in substantial funds then however present rules are changing.

Remember what ever size fund you have you can take 25% of it tax free up to a sum of 200k(800k fund) and the next 300k( 2 million fund not that any of us will) you pay 20% tax at present.

When you access the lump sum you have to take 4% a year every year minimum of the remaining funds

Example you have a 500k fund you can take 125k tax free. That leaves 375k which at 4%/year gives you an approximate income of 15k/year. If you had no other income you pay no tax. Let's assume you add the present OAP you would be paying about 2500/year and that would be if you spouse had a similar income.

There's nothing stopping the government from dipping their hands in private pensions again when they get hungry.

Not to put words in another posters mouth but I assume the point/sentiment is could you be putting money into a pension only to have it taken off you down the line ...so better to spend it now or invest it in other things that are harder to take away....

Personally I don't subscribe 100% to this as its fear based .... I invest in a pension for the tax relief and hope it won't be raped too badly by govt decisions.....but I wouldn't put all my eggs in one basket, a mix of asset types is your friend just as a mix of stocks/shares is a good idea long term in a (pension)fund

My point is obvious. A levy was put on private pensions not so long ago.

Finished 7 years ago.

I would not put all my eggs in one basket either. Retirement for many of us will be totally different to what many expect. People are healthier and fitter now than 20 years ago.

Many may semi retire. While dairy will have different issues a person with a drystock operations if it generates a fairly decent income could use it as part of there retirement plan. I have a couple of small rental properties.andvhave picked up short term work pre and post COVID.

While yes the government did dip into pension funds back 10ish years ago. The levy was a total of 2.7% over 6 years. In general pension funds gain 4-5% per year over a longer term.

If you spread that levy over 10 years it was 0.27%/year. If you spread over 20 years it was 0.135%. Taking tax relief and compounded gain it was equivalent to a tax of 0.05% per year on the fund.

If lads want to worry about that then I will leave them at it.

I be much more worried about other tax changes than that one

That 200k pension pot is probably made up as follows. 70-80k of tax free gain, 120-130 of contribution of which 48-52k is income tax relief. So owner put in about 72-76k in contributions

I am not naive it could happen again. However it might not happen either. Its probably a 50/50 chance. Its probably a one in 20-30 year event at best.

You are of the attitude that one should completely disregard pension investment because of an event that happened once in most pensions total life.

As for that 200k pension it would still have gained in value and been worth 240-250k if there was no contributions or withdrawal in that time.

Its called cutting off your nose to spite your face

I think you're being optimistic with your figures again, it's heavily taxed coming out unless you've no other source of income.

Admittedly the recession hit my pension fund at the real wrong time but it recovered a good bit because I waited to 70.

Your figures sound like a guy selling pension and then adds ''the value of your fund can rise as well as fall'' pfft