Budget 2025 is set to see an increase in the higher threshold for the Capital Acquisitions Tax (CAT) in a move that would ease the tax burden for some people transferring land to children.
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.
At present, 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) – CAT applied on property valued above €335,000;
- Group B (Where the beneficiary is a brother, sister, niece, nephew, lineal descendant, or lineal ancestor of the disponer) – CAT applied on property valued above €32,500;
- Group C (Any cases not covered by groups A or B) – CAT applied on property valued 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.
However, according to sources, the threshold for Group A will be increased in tomorrow’s (Tuesday, October 1) budget.
Although there will not be official confirmation of this change until the budget is announced tomorrow afternoon, sources have indicated that the Group A threshold will increase to €400,000.
The move 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.
Budget 2025
Budget 2025 is as eagerly anticipated for the farming community as it is for the rest of the country, with various farm organisations calling for various measures to be introduced and funded.
Earlier, the Irish Natura and Hill Farmers Association (INHFA) urged the government to introduce a fodder support scheme for sheep and cattle farmers in Budget 2025.
John Joe Fitzgerald, national vice-president of the INHFA, said that the organisation has seen an increase in the number of farmers contacting it with concerns about their fodder supplies.
Fitzgerald said: “With grass growth over the summer well behind previous years, leading to lower fodder supplies, farms across the country are now looking at tight supplies for the coming winter.”