Macra: Tax relief cap ‘sends opposite message’ to young farmers

Placing a cap on tax relief for young farmers would “send out the opposite message” on generation renewal, according to the outgoing president of Macra na Feirme.

James Healy was responding to changes in the 2018 Finance Act that placed a €70,000 limit on the amount of tax relief for stamp duty, stock relief and succession relief that young farmers can claim over their lifetime – a move which has already provoked concern from several quarters.

In a statement to AgriLand, Healy argued that there was a “vacuum of responsibility” in Government over this issue.

Our stance on the cap on tax relief remains the same. We are facing an uncertain future with Brexit and in turbulent times, you want to avoid as many shocks as possible.

“There is a vacuum of responsibility between Government departments regarding the cap on tax relief, and the lack of certainty over its implementation is holding back the transfer of farms to young farmers,” claimed Healy.

“Macra is currently engaging with the Department of Agriculture to try and reach a solution to this impasse, because while we are trying to promote generation renewal, this cap would send out the opposite message,” he added.

Revenue revisions

Revenue is currently revising its guidance manual on stamp duty relief for young trained farmers.

It is understood that the Revenue Commission will allow ‘consanguinity (inter-family) relief’ to be applied before the Young Trained Farmer relief – a move that could potentially significantly reduce the amount of relief needed.

According to the Revenue Commission, consanguinity relief only applies to land transfers. When the relief applies, the rate of stamp duty is 1%. To qualify for the relief, you and the person who transfers the land to you must be related.

In a previous statement to AgriLand, a spokesperson for Revenue explained that the €70,000 cap is imposed by an EU regulation, and is therefore not subject to review or amendment by member states.

The spokesperson stated that: “Revenue is currently revising its published guidance manual on the stamp duty element of the relief to confirm that, where a young trained farmer receives or buys farmland from certain relatives and is eligible for consanguinity relief, this relief can be applied before the Young Trained Farmer relief.”

As consanguinity relief operates by charging a reduced 1% rate of stamp duty, instead of the usual 6% rate on farmland, the amount of relief allowed – i.e. state aid granted – would be significantly reduced for many young trained farmers and ensures that they don’t breach the €70,000 ceiling.

The revised guidance is expected to be published in the coming weeks, according to a further statement from the Revenue Commission.

‘Disincentive’

As recently as last week, concerns were raised about the cap by one rural TD.

Jackie Cahill, a Fianna Fáil TD for Tipperary – and a beef and dairy farmer himself – said that the cap would turn potential young farmers away from the sector.

“The imposition of this limit could act as a disincentive, as some farmers may worry about breaching the cap over their lifetime,” said Cahill.

“All efforts must be made to encourage more young people into farming…any moves which could be seen to create obstacles to this must be properly examined,” he added.