The facts and figures to know about forestry
Guaranteed Income for 15 years – Income Tax free lump sum at clearfell – less labour input means more family time – plus an asset you can leave to your kids in the future
Daniel O’Connell, Regional Manager of Veon explains:
Many of the farmers who visit our office in Castleisland Mart ask the following questions to see if they can join the 19,000 Irish farm forest owners who have already planted forestry on some or all of their land:
Most land is suitable for planting. Veon’s foresters will assess the land and tell you if it is suitable for forestry and what species will best suit your land to maximise your returns.
The forest premium payments depend on the species planted. The species planted depends on the soil and other conditions of the land you own. Veon’s foresters will aim to maximise your premium income, balancing that with timber income after the premiums have run out in 15 years. Typically, a Sitka spruce forest of 25 acres with 10% biodiversity will generate €5,250 per annum for a 15 year period.
The first premium is paid when the first grant is paid by the Forest Service. From then on forest premiums are paid every April, subject to the plantation being up to an acceptable standard.
Yes, Forest premiums are free from income tax. However, you will have to pay USC and PRSI on your forest premium. Remember that income from your timber is also treated the same way.
The planting grant is paid in two stages – the establishment grant in year 1 and the maintenance grant in year 4. Most clients prefer to mandate these grants to the forestry contractor in a 4 year establishment contract. Veon takes on the cost of planting and maintenance on your behalf.
In most cases you will not have to pay anything to plant your land. The government scheme is designed to cover 100% of the costs of planting your land. In our experience, where grants have not covered the costs this will be due to high fencing costs or the plot of land being planted is less than 10 acres.
Yes, as long as the land you planted was claimed on an area aid map in 2008.
Yes, the forest premium will replace your dis-advantaged area payment. Our foresters will go through the pros and cons of this to make sure this is to your advantage.
We design your forest so that when the premiums run out, your forest will be ready for thinning. First thinning takes place between 14 and 20 years. Every 3-4 years you will receive income from thinnings. At the end of the rotation (30 to 35 years) your forest will be clear-felled and you will receive a large income-tax-free lump sum at that time. (up to €10,000 per acre)
Under current legislation you have to replant your land once it is clearfelled. There are no grants available for replanting your land. The income from the timber sale more than offsets replanting costs. (estimated €8001,000 per acre)
Under our establishment contract with you we will insure your plantations for the first 4 years until it receives the maintenance grant. We will cover your growing forest for public liability and any replanting costs.
Yes, you need permission to plant. As part of our work for you, we will get your land approved by the Forest Service. It usually takes about 12-14 weeks.
Even during the recession, the government has shown strong support for forestry. It is not likely that they would stop paying forest premiums to those who have already planted their land as they are contractually obliged to continue paying premiums once you have planted your land.
The trees and timber belong to you, even though the government pays for your land to be planted and pays you tax free forest premium.
Veon manages 40,000 acres of forests all over Ireland. Our foresters would be delighted to show you plantations we have planted and are managing so that you can see what happens at the various stages of growth.
We recently finished a harvesting clearfell for a client in Cork who generated €180,000 (€11,250/acre) from his forest of 16 acres of Sitka spruce. It was an excellent result for him and what made it more gratifying is the fact that his harvest helps sustain and provide a much-needed raw material for the local market, helping to further sustain jobs in the rural economy. I enjoyed playing a role in helping to achieve that result for him.
Professional forest planning and management ensures that the soil is enriched; that rivers are protected; that flooding risks are reduced; that carbon is sequestered from the atmosphere and that the environment as well as the forest owner are in a win-win situation. Crucially though, the forest owner has a crop that will generate income for his family for generations to come. What’s not to love about forestry?