Incorporating a farm

Apr 12

As personal tax rates continue to increase there is a growing number of advantages for certain farmers to incorporate. While not for every farmer there may be significant tax savings for larger higher earning farmers .

The largest advantage is capitalising the farmers own stock and machinery creating a directors loan inside the limited company which can be drawn down tax free by the farmer. This is a once off opportunity so timing is critical to maximise tax relief. Its also worth noting that buildings and land are generally not transferred inside the limited company as this could give rise to capital gains tax liabilities in the future.

Land , single farm payments and buildings may be leased to the limited company by the farmer.

Plant and machinery or Fixtures and Fittings do not normally give rise to capital gains tax as they usually transfer at Tax Written Down Value (TWDV)

Further advantages include

  • The availability of limited liability (Although less of an advantage in 2011 with large scale personal gurantee’s requested)
  • The ability to claim civil service rates of mileage and subsentence on business travel
  • Separation of personal assets from business assets

As the transfer from you to your company is treated as beingDublin Accountants at open market value between two separate legal entities, stamp duty will apply on the transfer.

Incorporation is not something to take lightly as it comes with increased compliance costs and cannot be undone. This post is not comprehensive and there is other matters to consider.

For further information please call us on Do My Books Dublin Accountants 01-4800531

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