Budget 2025 has seen the confirmation of an increased threshold for liability under the Capital Acquisitions Tax (CAT).
The threshold for transfers of property between parents and children will be increased to €400,000, it was confirmed today (Tuesday, October 1).
Increases were also confirmed for the other thresholds in the scheme.
Under the CAT, there are three thresholds, depending on the relationship between the disponer and the recipient of the property.
The threshold is the value above which the tax is applied. Therefore, if the value of the property is reckoned at below the threshold, the tax is not applied.
The three thresholds are:
- Group A (Where the beneficiary is a child of the disponer, or the minor child of a deceased child of the disponer);
- Group B (Where the beneficiary is a brother, sister, niece, nephew, lineal descendant, or lineal ancestor of the disponer);
- Group C (Any cases not covered by groups A or B) above €16,250.
The tax is applied, at 33%, on the excess value of the property over the threshold, with the tax payable by the recipient of the property.
Group A represents the category under which most farmland transfers take place.
Minister for Finance Jack Chambers confirmed in the Dáil today that the Group A threshold would increase to €400,000 from €335,000; the Group B threshold would increase to €40,000 from €32,500, and the Group C threshold would increase to €20,000 from €16,500.
The move to increase the threshold in Budget 2025 will likely be welcomed by farm organisations and government government TDs in rural constituencies.
Apart from the thresholds for applying CAT, farmers and their successors can also avail of the agricultural relief under CAT.
At present, the agricultural relief operates by reducing (for CAT purposes only) the market value of qualifying agricultural property by 90% and applying CAT to the remainder, subject to certain conditions.