Concerns agri-relief budget changes will 'hinder farm succession'
Concerns have been raised that changes to the Agricultural Relief outlined in Budget 2025 will "hinder" farm succession without halting non-farmer land purchases.
The Irish Creamery Milk Suppliers' Association (ICMSA) has said that concern is "rapidly growing" around the proposed changes to Agricultural and Retirement Relief.
Pat O'Brien, the association' Farm Business Committee chairperson, said there is a possibility that the changes would hinder genuine farm transfers to the next generation, while "leaving untouched the purchase of farmland by non-farmers seeking to avail of farm relief measures to avoid a range taxation".
"If the proposal's intention was to address land-banking by wealthy non-farming investors and individuals, the ICMSA believes that it will fail in this regard and that this land-banking will continue with investors continuing to utilise tax reliefs for this purpose.
"Even more concerning is the fact that we think that the six-year usage rule, for example, will end up excluding many very genuine farm transfers, and we have asked the government to ensure that this will not be the case when the Finance Bill is published," O'Brien added.
Agricultural Relief provides for a 90% write down on the value of agricultural property received as a gift or inheritance before Capital Acquisitions Tax (CAT) is charged on the remaining value, with the tax payable by the recipient of the gift or inheritance.
However, the relief comes with certain conditions. The property being received must be agricultural property, and must represent at least 80% of the value of the recipient’s total property.
The recipient must also satisfy the ‘active farmer test’, which means that they are required to:
- Farm the agricultural property on a commercial basis for at least six years, or:
- Lease the property to someone who farms the agricultural property on a commercial basis for at least six years.
However, in Budget 2025, Minister for Finance Jack Chambers said that the six-year active farmer test would be extended to the provider of the gift or inheritance of property as well as the recipient.
While the minister said during his budget announcement that this would address the increased value of farmland and concerns that Agricultural Relief is being used as part of tax planning strategies by wealthy individuals, the ICMSA believes it may have the opposite effect.
"The situation we now fear that we're going to find ourselves in is that genuine family farm situations, of the kind that were rightly accommodated under Agricultural Relief, could be potentially excluded from the relief, while, very ironically, wealthy non-farm transfers will be able to continue to claim this and other reliefs," O'Brien said.
He added: "If that disaster were to happen, it will mean that many family farms may have to be sold to pay the taxes, which in turn means more farmland becoming available for the investors to buy, the very opposite of what these proposed changes were supposed to achieve."
O'Brien called on Minister Chambers to clarify the exact circumstances around the new proposals and commit to ensuring that fam family situations currently accommodated under Agricultural Relief will continue to obtain the relief.
"This must be done while targeting the changes introduced under the Finance Bill in a way that impacts on lands purchased by wealthy non-farmer individuals and entities, rather than on genuine farm family situations.
"This is a hugely concerning matter for the farming community and one that requires speedy and decisive intervention on the part of the minister," the ICMSA farm business chairperson said.
