Tánaiste and Minister for Finance Simon Harris has announced in Budget 2027 that the farmers' flat rate VAT addition will be increased to 4.8%.

This brings the flat rate addition in line with the current VAT payable by farmers on livestock sold through marts, which is also 4.8%.

The Tánaiste had previously indicated that Budget 2027 would address the "anomaly" between the livestock VAT rate and the farmer flat-rate addition.

Since last January, the flat-rate addition paid to farmers not registered for VAT was reduced to 4.5%, while VAT on livestock sold through marts remained at 4.8%.

This means that farmers selling livestock through marts are losing the difference on the animals they sell.

There had been several calls from the agri-sector for this issue to be addressed.

The Irish Co-operative Organisation Society (ICOS) had said that last year's budget had created a "negative anomaly" regarding non-VAT registered farmers selling their livestock in the marts, which does not happen if the transaction is completed privately between two unregistered parties.

Minister Harris told the Dáil today: "The Farmers Flat Rate Addition is being increased from 4.5 per cent to 4.8 per cent in 2027. This will provide for full compensation for flat rate farmers for their VAT input costs."

Budget 2027

Elsewhere in Budget 2027, announced today (Tuesday, October 6), Minister Harris announced that he is removing the 3-year holding period for succession farm partnership applications made from January 1, 2027 onwards.

This, he said, was in response to the recommendations of the Commission on Generational Renewal.

The change means that assets can be transferred between the participants in the partnerships within the first three years of the partnership, effective from January 1.

Minister Harris also said he will increase the tax credit for farm succession partnerships from €5,000 to €10,000, for partnerships registered after January 1.

On farm safety, the Tánaiste announced that the accelerated Wear and Tear Allowance for Farm Safety Equipment will be extended by three years to December 2029.

12 further items (likely to be confirmed later) will be added to the list of items covered by the wear and tear scheme.

The Tánaiste also announced a reduction in the rate of VAT on respiratory vaccines for livestock from 23% to 9%.

Inheritance tax

Also in Budget 2027, the thresholds under the Capital Acquisitions Tax (CAT) will be increased.

The CAT taxes the value of an inheritance at a rate of 33%. Farmers can avail of agricultural relief that can reduce the taxable amount by 90% of the value of a qualifying agricultural property.

The 33% applies above different amounts, or thresholds, depending on the nature of the relationship between the disponer (the person who owned the property) and the beneficiary receiving the inheritance.

The 'Group A' threshold covers inheritances by a son or daughter of a disponer (or the minor child of a deceased child of the disponer).

This threshold will be increased from €400,000 to €420,000 under Budget 2027.

The 'Group B' threshold covers inheritances by a brother, sister, niece, nephew, or grandchild.

This threshold will be increased from €40,000 to €44,000.

The 'Group C' threshold covers all other cases not covered in Group A or Group B.

This threshold will be increased from €20,000 to €22,000.