The Government is to consider whether it should impose an upper age limit on a key tax relief that applies to farm transfers.

Budget documents reveal that it is assessing whether it should restrict stamp duty relief to farmers who transfer their farms before the age of 67.

Declan McEvoy, ifac’s head of tax, said consanguinity relief from stamp duty applies to farm transfers between close relatives who meet certain conditions.

It reduces the stamp duty payable from 7.5% to 1%.

On a 50ac farm valued at €500,000, stamp duty at 1% would cost €5,000 but at 7.5% it would cost €37,500.

Under the current rules, there is no age limit on the person transferring the farm.

Budget 2021

However, McEvoy warned that the tax expenditures report for Budget 2021 suggests that the Government may impose a new upper age limit for the transferor.

Farmers saved €28.76m in stamp duty costs by using the consanguinity relief last year.

Tax expert McEvoy pointed out that the Government documents suggest it will impose some age limit in the future on the tax relief, but it has not committed to the age of 67 yet.

Incentive

It wants to weigh up the incentive of the tax relief to encourage earlier transfer of land by the older farmer, but setting the upper age limit too low might discourage farmers from transferring to avail of the tax relief as they might see themselves as too young to retire.

The Government is also wary of setting the upper age limit too high, in case the older farmer decides not to transfer the farm until it is part of the estate transfer on death, which has Capital Acquisitions Tax (CAT) agricultural relief for the inheriting farmer.