13 Nov, 2018

Major difficulties for Young Farmers contained in the new Finance Bill 2018

Our Tax Team calls for issues in the Finance Bill to be addressed urgently or it could cost young farmers thousands in lost relief.

Our Tax Team, today called on changes to be made to the draft Finance Bill 2018. The Bill, as currently drafted, contains provisions that would be devastating for young farmers if not addressed before the bill becomes law.

The issues are as follows:

Currently a lifetime ceiling of €70,000 applies to the amount of grant aid available to a young farmer under the regulations. This means that the amount of tax relief must be aggregated across the relevant schemes, (1) Young Trained Farmers Stamp Duty (2) Stock Relief for Young Farmers and (3) Succession Farm Partnership.

The Finance Bill typically deals with these issues; however, Revenue have now issued two further guidance’s in relation to young farmer reliefs. This intervention from Revenue is very significant and significantly complicates the tax landscape for young farmers. Specifically, it makes clear the following:

  • The limits contained in the Finance Bill will apply to claims for relief made in relation to Stamp Duty from 1st January 2019 and for the year of assessment 2019 and subsequent years of assessment for Stock Relief and Succession Partnership Relief.

  • Any claimants for relief after January 2019 are advised that the three reliefs are now subject to the aggregation rules. Under that regulation the cumulative relief applies with effect from 1st July 2014. This means that anyone submitting a return from 1stJanuary next or tax teturns for 2019 year of assessment onwards must have regard to the amount of duty claimed since 1st July 2014 and the total amount should not exceed €70,000.

The impact of these changes on young farmers are as follows:

1. Young Farmer stamp duty relief is now being treated as start-up aid and so the tax relief being made available to young farmers is significantly less than in previous years.

2. Young Farmers seeking to buy land off a relative after 2020 or any non-relative from 1 January 2019 will now not be able to avail of tax relief for those transactions under the scheme.

3. Most young farmers will have used up their full €70,000 relief allocation by 1 January 2019 as anyone submitting a tax return from that date must, for the first time, consider the amount of duty they have claimed since 1 July 2014 (and the total amount should not exceed €70,000).

“The current draft of the Finance Bill contains some very costly provisions for young farmers that should be addressed before the Bill becomes law. The clarification received from Revenue by the ifac tax team this week shows that the Young Farmer stamp duty relief scheme is now clearly being treated as a start-up aid. All the planning and associated costs of both legal and tax will now be heaped on young farmers which is unacceptable. If this goes ahead it will prevent the young trained farmer from availing of relief on the purchase of land and it could also prevent them from getting a second or subsequent transfer free of stamp duty. This will be very bad news for young farmers.

If the Bill is not amended to address these issues it will turn the Young Farmers stamp duty relief from being a relatively simple relief into a massively complicated one which will not be kind to the up and coming new generation of farmers. From dealing with thousands of hard-working young famers around the country ifac know what a burden this change would be for them in a year that has been very difficult for the sector. With Brexit and CAP reform looming young farmers need all the help they can get.”