Young farmers facing stamp duty hikes as relief review ordered

Consolidation and consanguinity reliefs under review ahead of this year’s budget

A MAJOR hike in stamp duty on the gift to, or purchase of agricultural land by, young trained farmers could be on the cards following confirmation that a review of existing reliefs is being ordered.

Department of Finance officials stated in a recent letter to the farm organisations that a review of both consolidation relief and consanguinity relief was being undertaken ahead of this year’s Budget.

Over €22 million in stamp duty relief was claimed by farmers in 2018 under the consanguinity relief mechanism, which is aimed at encouraging inter-family and inter-generational transfers of agricultural land.

Consanguinity relief reduces the rate of stamp duty payable on land transfers to children where the transferee cannot otherwise benefit from the young trained farmer relief.

In relation to the second stamp duty relief which is up for review, it is estimated that the savings on consolidation relief could be worth up to €1 million to the farm sector annually.

This measure aims to promote the consolidation of holdings by reducing farm fragmentation and thereby improving the viability of farm businesses. It allows, where conditions are satisfied, a person selling an outside block of land to pay 1pc stamp duty on the purchase of land nearer their main farm holding.

Both measures provide a saving of 6.5pc in stamp duty payments for qualifying farmers, by reducing the rate at which stamp duty is charged from 7.5pc to 1pc.

Consanguinity relief applies on the transfer of land between blood relatives, civil partners or adopted children.

In 2017 the conditions around consanguinity relief were changed for four years when the rate of stamp duty was increased to 6pc. It is now 7.5pc.

This move resulted in the waiving of the requirement that consanguinity relief only applied where the land owner was aged 67 or younger.

Relaxing the age restriction was viewed as providing a fouryear window for the transfer of land to young trained farmers.

However, with the Department of Finance now assessing the possibility of removing the age concession from this year, young trained farmers could be faced with paying 7.5pc stamp duty in 2021 on the value of land transfers above a €950,000 threshold.

Cork-based accountant and farm taxation consultant, Kieran Coughlan, estimated that up to half of the lifetime farm transfers in 2021 could be affected by potential changes to the stamp duty reliefs.

Mr Coughlan said farmers considering transferring their farms to the next generation should seek advice without delay in order to assess what the changes could mean for them.

In some cases land owners might want to fast forward plans to transfer the family farm before the relief expires or changes, he said.

In its letter to the farm organisations, the Department of Finance states that “ex-post evaluations” of the consanguinity relief and consolidation relief will “examine whether their extension should be proposed to the Minister for Finance” for inclusion in the 2020 Finance Bill.

Views from the various industry stakeholders are to be supplied to the Department of Finance by Monday, March 16 at the latest.