There has been a broad welcome from farming for the increase in the capital acquisitions tax (CAT) threshold to €4m for farmers who qualify for agricultural relief.

This has come about because the CAT threshold has been increased from €335,000 to €400,000 in Budget 2025, with agricultural relief continuing to increase that threshold tenfold.

However, the new active farmer clause, designed to address "concerns that agricultural relief is being used as part of tax planning strategies by wealthy individuals" is causing concern on Tuesday evening.

Up until now, the inheritant of land had to farm it for six years to be classified as an active farmer and avail of agricultural relief.

Minister for Finance Jack Chambers said: "I am extending the six-year active farmer test to the person who provides the gift or inheritance," describing it as supporting "current farmers and the next generation".

Fear

The fear is that this new net will catch family farm units that don't fulfil the criteria where the person passing on the farm has either actively farmed it for at least six years or long-term leased it for at least six years.

This applies to gifts and inheritances taken after 1 January 2015 and where the valuation date is also after 1 January 2015.

While full details of how this new requirement will work in practice are yet to be understood, concerns raised will need to be addressed quickly.