1 Farm the agricultural assets on a commercial basis with a view to making a profit and spend at least 50% of their normal working time farming. Revenue generally accepts that this condition is met where the person farms for at least 20 hours per week, averaged over the year.
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Agricultural relief: What the latest Budget 2027 proposals mean for farm families
The Department of Finance has published the Tax Strategy Group papers ahead of Budget 2027, and Agricultural Relief is once again being examined in detail.
Agricultural Relief is one of the most important tax reliefs available to farming families on gifts and inheritances. It reduces the taxable value of agricultural land and other qualifying agricultural assets by 90%.
Currently, qualifying relies on passing two tests:
The Farmer Test: On the day of receiving the farm, at least 80% of the total assets of the person receiving the land must consist of agricultural assets (including the agricultural assets being received).
The Active Farmer Test: Following the transfer, the person receiving the land must meet one of three conditions for six years:
2 Farm the agricultural assets on a commercial basis with a view to making a profit and hold a recognised agricultural qualification, such as a Green Certificate.
3 Lease substantially (75% of the value) of the agricultural assets to someone who meets either of the above tests.
Budget 2025 proposed major changes to how a farmer qualifies for the relief.
At a high level, there were two key proposals:
The Active Farmer Test would apply to both the person giving up the land and the person receiving it. Before the transfer or death, the donor or deceased would have had to farm the land, or lease it to an active farmer, for the previous six years.
The relief would be removed where cash is gifted or inherited with the specific requirement that it be used to buy land, together with a number of other complex changes.
Submissions, including many of our own, outlined serious concerns for genuine family farm transfers.
Consequently, these changes were paused, but the legislation remains in place subject to the Minister for Finance signing a commencement order.
The Tax Strategy Group papers have now proposed three alternatives:
Proceed with the 2025 proposal with the aim of dealing with tax planning schemes using the relief, "accepting that there would be some consequences for a small group of farmers who are unable to meet the additional disponer requirements, some of which would be mitigated by the provision being introduced on a phased basis."
Repeal the revised provisions from tax legislation as part of the Finance Bill process, accepting that "the impact on the genuine farming sector would be too significant to justify introducing such a measure."
Develop a new revised relief to address tax planning, considering "a model similar to the UK model which introduced a cap on their Agricultural Relief."
On 16 September 2025, the Commission on Generational Renewal in Farming published its report.
One of the areas covered was “Taxation Supports” where they outlined conclusions regarding the proposed changes.
“Agricultural Relief should remain available to farm families to facilitate succession and the intergenerational transfer of farms. If changes are deemed necessary, the Department of Finance should undertake significant stakeholder engagement, including with tax practitioners experienced in this area, before any changes are commenced. The priority should be the retention of Agricultural Relief for farm families with the objective to facilitate succession and the inter-generational transfer of farms.”
The report considered the potential consequences for some small farmers.
“Any changes which result in triggering significant tax liabilities for successors will not only hamper generational renewal, but they will also seriously threaten the ongoing economic viability of Irish farms.”
Simon Harris, now Tánaiste and Minister for Finance, put it well at the time: “If something’s not broken, I wouldn’t try to fix it.”
When farm families are already trying to manage falling crop prices, unpredictable weather, and high diesel bills, throwing tax limbo onto the pile only creates unnecessary worry for anyone trying to plan the future of their farm.
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