Kieran Coughlan: Accelerated capital allowances are back on the table

The allowances are available over a wider defined description than simply ‘slurry storage’. 

It seems like a lifetime away since Ireland’s farmers were able to claim accelerated capital allowances under so-called "farm pollution control allowances", covering buildings and structures such as soiled water storage tanks, tank fences, dungsteads and walled silos. 

With farm buildings and structures, usually the cost of such work is allowable for tax purposes over a seven-year period at a rate of 15% per year and 10% in year seven. However, with accelerated allowances, the write-off against profits can be much quicker. 

The old farm pollution control allowance scheme that operated up until January 1, 2011, allowed a write-off over a three-year period. A new scheme was introduced for 2023, allowing allowances to be claimed against profits over a shorter than standard period in respect of "slurry storage". 

As with the previous accelerated capital allowance scheme, the devil is in the detail and the allowances are available over a wider defined description than simply slurry storage. 

The types of investment that can qualify for accelerated allowances under the new scheme include:

• Floors and walls of animal housing; 
• Mass concrete tanks with roof or cover; 
• Precast concrete tanks with roof or cover; 
• Circular slurry stores with roof or cover; 
• Geo-membrane lined stores with roof or cover; 
• Farmyard manure pit with roof or cover; 
• Collecting yards; 
• Cattle enclosure yards; 
• Automatic slurry scrapers; 
• Simple slurry aeration system. 

The construction works must be to a standard as prescribed by the Department of Agriculture, and in respect of the slurry tanks, only such tanks which are covered will qualify for capital allowances. 

The new regime is legislated for under Section 658A of the Taxes Acts. The accelerated allowances are only available to a person carrying on a trade of farming. The expenditure must be incurred in the period January 1, 2023, to December 31, 2025. 

The qualifying expenditure can be written off at a rate of 50% per annum over a period of two years. There is a limit of €500,000 on the total amount of relief that can be granted to any person under the scheme.

Farm safety scheme

Separate to the accelerated capital allowances scheme for "slurry storage", accelerated allowances are available in respect of certain farm safety equipment similarly allowable over a two-year period rather than a usual eight-year period. 

That is where the similarities end though, as that farm safety scheme is under separate provisions within the legislation and is more awkward to obtain, as persons wishing to avail of these accelerated allowances must make an application to the Department of Agriculture via a form FSACA, setting out the type of expenditure incurred and including a scanned copy of the invoices detailing the work done. 

Payments made after the submission of an application for a certificate are ineligible and will be rejected. 

The type of expenditure that can qualify under this scheme includes:

• Hydraulic linkage arms mounted tractor jacking systems;
• Big bag (equal to or greater than 500kg) lifter, with or without integral bag cutting system;
• Chemical storage cabinets;
• Animal anti-backing gate for use in cattle crush or race;
• Certain quick hitch mechanisms for rear and front three-point linkage;
• Modified controls to enable full-hand operation of a farm vehicle; 
• Provision of an integrated ramp, lift or hoist to facilitate access to a farm vehicle by a disabled person.

 The accelerated allowance scheme for farm safety equipment is subject to an overall cap, meaning not all applicants may receive approval where the scheme is oversubscribed. This scheme is scheduled to end on December 31, 2023, and it is worthwhile seeing if this scheme is extended in the forthcoming budget.

As a separate measure to the accelerated allowances detailed above this year, the Department of Agriculture has launched a National Farm Safety Measure 2023, which provides a financial contribution to participating farmers towards the cost of quad bike (ATV) helmets and PTO shaft covers. 

The contribution is 60% of the Vat exclusive cost subject to financial limits. 

Farmers looking to avail of this grant should login to the Agfood portal, and make their application to be included in the scheme under the option ‘AgSchemes - Expression of Interest’. 

It is important to note that aid will not be paid for equipment purchased before submission of the Expression of Interest. Further information on each of the above is available from Revenue and the Department of Agriculture.