Relief for Young Farmer Over Stamp Duty says New Macra President Thomas Duffy

Post on: Mon, 20, May 2019

A key issue for Macra na Feirme since Budget 2018 has been receiving clarity around the state aid rules. Macra along with other farm bodies began seeking clarifications once the issue became apparent, from both the Revenue Commission, Department of Finance and the Department of Agriculture, Food and the Marine directly.

The decision to announce application of this rule with no prior warning raised a number of questions, not least why the issue was not raised at the renewal of stamp duty and stock relief to 2021. The lack of warning about this issue from either national or European level, has made it all the more difficult for young farmers to plan.

The confusion around the issue, exasperated the potential impact of the limit. Uncertainty is a major threat to succession planning, particularly in light of issues such as those who lost out on both installation aid and young farmers aid. Inheritance is often a delicate matter both financially and personally.

We have welcomed the Revenue Commissioner’s clarification that the €70,000 limit will not include the 6% of land and property value transfer but on 1% of value after young farmer stamp duty relief is applied. Macra has been seeking additional and information from both Revenue and the Department of Finance.

This means that on inheritance of a farm of 120 acres at a price of €10,000/acre a young farmer could have reached the €70,000 cap by €2000. With this announcement however, it would require a transfer of land significantly larger in order to be impacted by the cap with stamp duty relief alone.

There is another issue however, as this cap also applies to stock relief, the value of this incentive is significantly reduced, as many young farmers will seek to increase production and corresponding stock numbers. This means even when a young farmer does not reach the cap, by virtue of inheritance related stamp duty relief, they may by both combined. A key aspect of governmental commitment to generational renewal and young farmers starting out or on inheritance, has been the 100% Stock Relief.

As this is a lifetime cap, not only would there be stamp duty on inheritance but also on the purchase of lands. This means that many young farmers may not only be impacted on either inheritance or in building their herds but also if/or when they can afford to expand their block to ensure an economic size for their farms.

However, this cap potentially undermines the value of those measures putting a significant limit for those who can avail of both duty and stock relief. This is something Macra will call for additional measures to compensate for this loss of value.

Macra will continue to lobby on behalf of all young farmers to ensure that the state aid rules do not create a further unlevelled playing field which slows transfer of lands and collaborative farming such as partnerships and joint herds or leasing arrangements and further distorts our already unbalanced age profile in agriculture.

Young farmers are facing a number of challenges, from recovery after last year’s drought, to low returns from the market and larger economic challenges that throws into uncertainty their business plans such as Brexit. Young farmers cannot afford any additional uncertainty about these essential reliefs and further clarity must be given if these caps truly cannot be lifted.