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11 Nov, 2022

Farmers urged to examine their farm business structure

Farm business structure is crucial to ensure farms are working as effectively as possible while minimising tax. 

A Partnership may be attractive owing to both the social aspect and the tax advantages, as profits can be spread among partners. However, you do need to think carefully about whether you are suited to a Partnership and whether you and your potential partner can work well together. In addition, forming a Partnership has far-reaching consequences so legal and tax advice is crucial.

Below are the answers to the key Partnership questions: 

Should I draw up a Partnership Agreement?

Yes. The Partnership Agreement sets out the rules of the partnership and will determine how assets are distributed should the Partnership end.

Should I register the Partnership?

Registering provides certain tax benefits in relation to Stock Relief. Collaborative farming structures have a grant available for the setup of a Registered Partnership. 

Once registered, you can then transfer to the Succession Farm Partnership Register, which provides an incentive of €5,000 for up to five years during the Succession Agreement term or until the successor(s) reach the age of 40.
What are the thresholds when transferring to my son or daughter?

Your child is entitled to €310,000 of a lifetime gift and an inheritance up to the same amount. However, any assets previously transferred (e.g., a site or shares) will reduce this.  

What about other reliefs?

Agricultural Relief reduces the taxable value of a property, including land, by 90%. If they do not qualify, they may be able to claim Business Relief. If neither of these reliefs applies, your son or daughter will be liable for the tax on the full transfer value.