1st Published in The Farming Independent on May 10th, 2024
Michael Brady.
Agricultural Consultant and managing director at Brady Group: Agricultural Consultants & Land Agents.
The trading of BISS entitlements 2024 is now well underway with the Basic Income Support for Sustainability Scheme closing deadline looming (presently midnight on the 15th of May).
If you are buying, selling, leasing in or leasing out entitlements in the next few weeks here 10 tips to consider:
- Buying v Leasing
There is no clawback on the sale of BISS entitlements again in 2024. This has caused those with surplus entitlements to consider selling their entitlements instead of continuing to lease them out again this year. It also makes sense to buy entitlements instead of leasing them if you have ‘naked land’ as they are guaranteed for the next 4 years until 2027. It the same concept as renting a house versus buying a house.
- Prices
In my experience to date this year, selling/buying entitlements are making are around x 2.5 time their value similar to last year however leasing entitlements are back and making in the region of 50% of their 2024 value.
- Base value for selling/buying
When buying/selling entitlements at 2.5 times their base value, the base value should be the average BISS Unit value for the 4 years between 2024-2007. This removes any confusion about paying different prices for high or low value entitlements. The reality is that high value entitlements are going to fall and low value ones are rising over the next 3 years(convergence).
- Organise finance early
If you decide to buy entitlements get your finance organised early. Buying entitlements is a bigger sum to pay than if you have been traditionally leasing in every year. Licensed agents will require money upfront to hold in their client account until the trade is processed by the Department of Agriculture Food and Marine.
Most agents charge in the region of 5%+vat @23% for buying and selling. Minimum fees apply (€150+vat per transaction) as small number of entitlements generate fees that are too small to make the transaction worthwhile for agents. Remember a licensed trustworthy agent is a value for money agent.
- The 2 year rule
There is a 2 year ‘use it or lose it’ rule with entitlements. If you did not use them last year you must use them this year or you will lose them to the national reserve.
- Single or part of an entitlement
All advisors/consultants and agents are ‘flat to the mat’ busy until the deadline. If you have one or part of an entitlements don’t expect the agent to be negotiating for you, there is not enough time or financial reward.
- BISS amendments
There is a 25-calendar day period after the 15 May closing date for the acceptance of late applications and any necessary supporting documentation. However, deductions to payments at a rate of 1% per working day in respect of BISS will apply to late applications which are received during this period (see table following). Except in cases of force majeure / exceptional circumstances, applications can be accepted after this 25-calendar day period but will be subject to late application penalties. The same rate of deduction will apply to Eco scheme, & CRISS.
- Transfer Confirmation Signature Form
The Department of Agriculture Food and Marine (DAFM) are insisting that the Transfer Confirmation Signature Forms must be witnessed by a solicitor or peace commissioner again this year.
- Tax
The tax treatment of income received from entitlements must be considered when planning to sell or lease entitlements. There is Capital Gains Tax (CGT) on selling which may be a 10% or 33% depending on your situation. There will be income tax on leasing unless it’s part of a long term lease with land. In my experience every farmer’s individual situation is different, therefore it is vital to go through your options with an experienced consultant/advisor before any decisions are made in respect of BISS entitlements.
Some advisors/consultants have decided not to partake in the trading of entitlements this year due to time pressure with BISS and other scheme applications. Therefore, don’t let your decision on trading BISS entitlements to the last minute as you may not get your entitlements traded. Select an experienced agent or Electronic Transfer Facilitator (ETF), transfer your entitlements to their ETF number and trust them to do the business for you.