Before answering your above query, I would first advise that you ensure all relevant taxes involved in the transfer of the farm have been properly dealt with. These taxes may include Capital Gains Tax, Capital Acquisitions Tax or Stamp Duty. It is vitally important that all these taxes are considered and that all available reliefs are properly claimed to prevent a potentially large tax burden befalling you and your family. With this in mind I would advise you to contact a qualified tax professional in relation to the transfer of the farm, if you have not already done so.
In relation to your above query, all farmers are within the charge to income tax and are assessed to such on the same basis as any other trade. As a result of this you will now be required to register for income tax, prepare annual farm accounts and file your annual income tax return each year. That being said there are a number of potential reliefs available to farmers which are not available to other trades and which may assist in reducing your income tax bill.
A qualifying farmer may elect to have his farming profits which are chargeable to income tax calculated by reference to an average of the profits arising in each of the preceding three years. It should be noted that a farmer may not elect for income averaging unless he has been charged to tax on his farm profits for the preceding two years on the normal basis. An individual who elects for income averaging for a particular year will be assessed on that basis for that year and for each subsequent year.
The valuation of stock is also an important element in finalising annual farming profits. The normal basis of valuing trading stock is the lower of cost or net realisable value. In order to avoid difficulties which can arise in determining cost in the case of immature farm stock cost may be taken as 60% of the market value of cattle, 75% of the market value of sheep and pigs and 75% of the market value of harvested crops. Should a farmer’s closing stock increase in a tax year, stock relief may be available to reduce any tax liability. This allows for tax relief equal to ¼ of any increase in closing stock from one accounting period to the next. The legislation also provides for enhanced stock relief of 100% for a period of 4 years for certain young farmers who are under 35 years old and meet all other qualifying conditions. As you are 30 years old this enhanced relief may now be available to you.
In order to confirm the applicability of the above reliefs to your own situation and answer any other questions you may have in relation to your farming business, I would advise that you discuss these points in greater detail with a qualified tax advisor.