Processing of 2025 advance payments under the Agri-Climate Rural Environment Scheme (ACRES) is ongoing and payment runs will continue into next month.

According to Minister for Agriculture, Food and the Marine, Martin Heydon, following the pay run on December 16, almost €194.6 million had been issued in advance payments in respect of 2025.

As of that date, a total of 46,599 participants, representing just under 87% of active participating herds, received their 2025 advance payments, the minister said. 

Tax treatment

Agriland asked Revenue what tax implications there could be for farmers if ACRES payments due in 2025 are not paid by the Department of Agriculture until 2026.

A Revenue spokesperson said that ACRES payments will be subject to tax as income, and will generally be taxed under Schedule D Case I as a trading receipt of the farmer.

"The specific tax treatment is dependent on whether the subsidy is paid to a farmer as a sole trader or to a company carrying out farming activities," Revenue said.

"An ACRES payment made to a company will be subject to corporation tax where certain conditions are met such as the company holding a herd number."

Accounting treatment

Revenue said that in general, payments in the form of income supports such as ACRES to farmers are paid in respect of a full calendar year, and taxed in that year.

"However, in cases where the payment for the relevant year, in this case 2025, has not issued until the following year (2026), the assessable income for tax purposes will be dependent upon the accounting treatment adopted by the farmer," Revenue explained.

"However, either the earnings basis or the receipts basis will be accepted provided taxpayers apply the basis consistently, and there is no significant loss of revenue over that which would arise if the accounts were prepared on a full earnings basis."

Using the earnings basis, the ACRES payment may be recognised as a receipt accrued over the calendar year in respect of which it was paid, Revenue explained.

"For example, in a case where a farmer’s accounts are made up to December 31 annually, the ACRES payment for the year 2025, regardless of when it is paid, will form a receipt of the year ended December 31, 2025 (2025 tax year)."

Under the receipts basis, the ACRES payment may be recognised as a receipt pertaining to the date the payment is issued by the DAFM. 

"For example, if accounts are made up to December 31 annually, the ACRES payment for the year 2025, if paid in January 2026, will form a receipt of the year ended December 31, 2026 (2026 tax year).

"Where the use of the receipts basis would result in no ACRES payment being recognised in a 12-month basis period (e.g. where the issue of the ACRES payment is delayed until after the year-end), the returns of that and subsequent periods may be submitted on the earnings basis."

Revenue said it reserves the right to carry out reviews if a person changes the basis on which their accounts are prepared.