Minister for Finance, Jack Chambers has today (Thursday, October 10) published the Finance Bill 2024, which implements the taxation changes announced in Budget 2025 last week.
The Finance Bill 2024, which was approved by government earlier this week, also introduces some “necessary” administrative and technical changes to the tax code.
Finance Bill 2024
Stock Relief
The bill provides for the extension of three stock reliefs – General Stock Relief, Young Trained Farmer Stock Relief and Registered Farm Partnerships Stock Reliefs – to December 31, 2027.
Flat-rate compensation
The bill provides for an increase in the flat-rate scheme for unregistered farmers. This measure compensates such farmers on an overall basis for VAT incurred on their farming inputs.
This rate will increase from the current rate of 4.8% to 5.1% from January 1, 2025.
Capital Acquisitions Tax – thresholds
The Capital Acquisitions Tax (CAT) applies to both gifts and inheritances. For CAT purposes, the relationship between the person giving a gift or inheritance (i.e. the disponer) and the person who receives it (i.e. the beneficiary) determines the maximum amount, known as the “group threshold”, below which CAT does not arise.
There are three tax-free thresholds depending on the relationship between the disponer and the beneficiary, with CAT applying on the amount over the thresholds.
The CAT tax-free thresholds increased on October 2, 2024 as follows:
- Group A from €335,000 to €400,000;
- Group B from €32,500 to €40,000;
- Group C from €16,250 to €20,000.
Capital Acquisitions Tax – agricultural relief
Tax legislation provides for relief from CAT for gifts and inheritances of “agricultural property” where certain conditions are met. Where the relief applies, it operates by reducing for CAT purposes the market value of qualifying assets by 90%.
To qualify for the relief, a number of conditions must be met by the beneficiary. One condition is the active-farmer test, which requires the beneficiary to farm the agricultural property or lease it to an individual who farms the agricultural property, for at least six years following the gift or inheritance.
The active-farmer test will be extended to the disponer of a gift or inheritance, such that the disponer would be required to farm the agricultural property or lease it to an individual who farms the agricultural property for at least six years prior to the date of the gift or inheritance.
The bill contains transitional arrangements by which, if a gift or inheritance is made in the period from January 1, 2025, to December 31, 2030, the active-farmer test will only apply back to January 1, 2025, even if less than six years have passed between then and the gift or inheritance being made.
Accelerated capital allowances on farm safety equipment
Amendments to the accelerated capital allowances for farm safety equipment are included in the bill to allow for relief in respect of expenditure by farmers on certain Targeted Agriculture Modernisation Schemes (TAMS) eligible safety equipment, which is not currently supported by this scheme.
The additional items are as follows:
- Fixed sheep handling units;
- Fixed cattle crushes/races;
- Calving gates;
- Flood lights for farmyards;
- Livestock monitors; and
- Sliding doors or roller doors for agricultural buildings.
Capital Gains Tax – retirement relief
Retirement relief is available for gains arising on the disposal of a business (including a farm) to a child and to others.
Two changes will take effect from January 1, 2025. Firstly, the upper age limit for the relief will increase from 65 until the age of 70 in order to reflect current work practices.
The Finance Bill 2024 will also introduce a “clawback” mechanism to apply in the case of disposals to children above €10 million such that where the child/children retains the assets for more than 12 years, the Capital Gains Tax will be fully abated.
Residential Zoned Land Tax (RZLT)
The RZLT was introduced in the Finance Act 2021 and seeks to increase housing supply by encouraging the activation of development on lands which are suitably zoned and appropriately serviced. The RZLT is an annual tax to be calculated at 3% of the market value of the land in scope.
Amendments included in the Finance Bill 2024 will provide for a further opportunity for RZLT landowners to seek a change in zoning in 2025 to a zoning which reflects the economic activity they undertake on the land.
Provisions of the bill will allow for a 12-month deferral of RZLT liability between the grant of planning and commencement of development, and the exemption during Judicial Review Proceedings brought by a third party as well as other technical amendments.