As the content of Budget 2023 continues to be examined, many farmers will be wondering how their finances will be impacted in the coming months.
The €11 billion budget presented yesterday (Tuesday, September 27) saw the government outline various economic and welfare actions focused on the deepening cost-of-living and energy crises.
The single biggest measure, costing nearly €900 million, is a permanent increase in all social welfare payments of €12/week.
Agriland, along with financial services firm BDO Ireland, have examined several case studies to determine what the impact of the government’s financial plan will have on the farming community.
Figures in these case studies are based on statistics included in the Teagasc National Farm Survey 2021 and experts working within the industry.
Sheep farmer case study
In this article, we consider how Budget 2023 will impact a full-time sheep farmer with a flock of 140 ewes on a 45ha holding.
The 66-year-old farmer has an estimated annual gross output of €61,000, costs are running at €40,000 which leaves a profit of €21,000.
Both the farmer and his wife, who is retired, are in receipt of the state pension. The couple have no dependent children.
The joint income of the married couple, who are both over 65, is above the exemption threshold of €36,000, so they are subject to income tax.
However, as the total income is below the standard rate cut-off for a married couple, it is subject to the 20% income tax rate.
They also are liable for Universal Social Charge (USC) on income over €21,000. PRSI does not apply, due to the couple’s age.
Due to the social welfare payment increases in Budget 2023, the state pension will increase by €12/week or an estimated €635/year.
This means that the sheep farmer and his wife will benefit by an extra €1,318, resulting in a joint income of €46,648.
Their total tax liability will fall by €46 to €2,474.
As part of the government response to the rising cost-of-living, the couple will receive a double pension payment in October and December.
They will also be able to avail of €600 worth of electricity credits allocated to every household. This will be paid in three €200 installments, the first of which will be made before Christmas.
The sheep farmer will continue to benefit from a double deduction in marked gas oil (green diesel) as there was no change to section 664A in Budget 2023.