Three questions I often hear are: what exactly is a young trained farmer? Do you need to be one to avoid gift/inheritance tax on the transfer of the family farm? And what other benefits accrue?
he first question causes a lot of confusion. The ‘trained’ part is easy: the person must have a Green Cert or equivalent.
The ‘young’ part is not so simple: in certain schemes associated with the CAP reform programme (EU-funded), a young trained farmer is 40 or under, whereas with the Stamp Duty Exemption Scheme and 100pc Stock Relief Scheme (Government-funded), a young trained farmer is under 35.
It seems that by European standards, farmers stay young for longer.
Being a young trained farmer has no bearing on gift or inheritance tax. However, under the rules of Agricultural Relief, being a trained farmer — ie, having a Green Cert or equivalent but being over 35 — gives you the option of farming the holding on a part-time basis rather than being required to farm it for 20 hours or more per week or leasing it to a full-time or qualified farmer.
There are various schemes, incentives and benefits that favour young trained farmers which can make a significant difference for someone starting up and/or taking over a farm — The current list comprises:
- Stamp Duty Exemption on farm transfers;
- Stamp Duty Exemption on land purchase.
- 100pc Stock Relief`
- Succession Farm Partnership tax credits.
- Complimentary Income Support (CIS-YF)
- Eligibility for National Reserve Entitlements.
- TAMS grants 20pc top up.
all of which are also available to young trained farmers farming in partnership.
Stamp Duty Exemption on farm transfers
A zero rate of stamp duty applies to farmers who are under 35 years of age and who have satisfactorily attended a course as set down by the Revenue Commissioners, typically a Green Cert.
The relief applies where no power of revocation exists and runs until December 31, 2025.
The land which is the subject of the transfer must be retained for five years and must be farmed by the transferee for at least 50pc (typically 20 hours) of his /her normal weekly working hours.
There is a notable distinction between this relief and other reliefs, such as Agricultural Relief, in that the usage conditions can only be satisfied by the transferee, and the period for which the land must be farmed is five years and not six.
Family transferees who fail to qualify for the exemption will have to pay 1pc Stamp Duty, so for a farm worth €1m, qualifying for the exemption is worth €10,000.
Stamp Duty Exemption on land purchase
Similar to farm transfers and subject to the same conditions, an exemption to Stamp Duty applies for young trained farmers who buy land — but the saving is worth 7.5pc of the purchase price.
So a plot of land costing €500,000 will attract a saving of €35,000.
There is an upper ceiling on the amount of relief available on transfers and purchases which equates with €70,000 in tax value to include any relief granted under the 100pc Stock Relief Scheme and the Succession Partnership Scheme.
100pc Stock Relief Scheme
A system of stock relief claimable at 100pc (with no claw-back) for young qualifying farmers under 35 is available for four years from first setting up.
The scheme runs until December 31, 2024. The cash equivalent amount of stock relief at the 100pc rate which a young trained farmer can receive is limited to €40,000 in a single year.
Succession Farm Partnership tax credits
This is where an intending transferor and transferee enter into a registered partnership and sign an agreement that at least 80pc of the farm will be transferred no sooner than three years’ time and no later than ten years’ time.
Such a partnership attracts an annual income tax credit of €5,000 for up to five years, split annually between the partners in proportion to their profit sharing ratio.
In total, this can be worth up to €25,000 over the first five years of the partnership.
Complementary Income Support
This measure under CAP 2023-26 is designed to provide support to young trained farmers in the years following setting up as head of the holding — solely or jointly.
The scheme will provide certainty in terms of the level of income support for eligible applicants for up to five years.
Eligible applicants who are entitled to a payment under the Basic Income Support for Sustainability (BISS) may receive a further payment per eligible hectare (max. 50ha) in the region of €178/ha over the CAP period, though exact rates will fluctuate based on the level of participation.
Eligibility for National Reserve Entitlements.
Young trained farmers (age limit 40) participating in BISS and setting up an agricultural holding for the first time — or having set up such a holding during the five years preceding the first submission of a Basic Payment Scheme application — may qualify for new entitlements from the National Reserve, or to increase existing entitlements.
TAMS grants 20pc top up
The new TAMS III scheme will offer enhanced rates of grant to young, trained farmers (not over 40) of 60pc on approved investment costing up to €90, 000.
This amounts to grant aid of up to €54,000 — an increase of €18,000 over those qualifying for the 40pc rate.
Martin O’Sullivan is the author of the ACA Farmers’ Handbook and is a farm business and tax consultant based in Carrick-on-Suir; www.som.ie
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