Farming is the “lifeblood of rural communities across Ireland,” the Minister for Finance told the Dáil today (Tuesday, October 10) during Budget 2024 as he unveiled a number of key measures which could directly impact on farmers.
Minister Michael McGrath outlined a range of agricultural relief measures which he said were designed to “provide important supports to young farmers and the farming sector generally”.
Some of the key measures announced today by the minister included:
- An extension of consanguinity relief;
- An extension to the accelerated capital allowances for farm safety equipment;
- An increase in the maximum aggregate lifetime limit of a number of farm-related reliefs to €100,000 including the Young Trained Farmer Stamp Duty relief, Stock Relief for Young Farmers and the relief for succession farm partnerships.
- An extension to Land Leasing Income Tax Relief which only becomes available when the land has been owned for seven years to support “active farmers”.
Residential Zoned Land Tax
The government has been repeatedly urged to resolve the Residential Zoned Land Tax (RZLT) issue for farmers – the tax which had been due to come into force from next February and which applies to land that is zoned for residential use and has access to services such as water supply, roads and lighting.
The controversial new tax had been met with strong opposition from farming organisations.
In today’s budget the Minister for Finance said that RZLT “is an important initiative to activate suitably zoned and serviced land for housing”.
However, the minister has now “extended the liability date of the tax by one year” to allow for the planned 2024 review of maps to take place and “to afford affected people with a further opportunity to engage with the process”.
VAT Registration Threshold
Minister McGrath said he intends to increase the existing VAT registration thresholds for businesses from €37,500 for services and €75,000 for goods to €40,000 for services and €80,000 for goods respectively.
The government also confirmed that the flat-rate compensation measure for farmers will decrease from 5% to 4.8% from January 1, 2024.
The flat-rate addition compensates farmers who are not VAT registered for VAT incurred on their purchases.
Cost Of Living
The Minister for Finance confirmed that he will extend the 9% reduced VAT rate for gas and electricity for another 12 months.
He also announced that the final tranche of fuel excise increases – including an increase to the price of green diesel – which were due to take effect on October 31, will be deferred until next year.
A one-year Mortgage Interest Tax Relief scheme for homeowners with an outstanding mortgage balance on their primary dwelling house of between €80,000 and €500,000 as of December 31, 2022 will also be introduced by the minister.
But the Vacant Homes Tax, which was introduced last year, will be increased by five times the property’s existing basic Local Property Tax rate.
This increase will take effect from the next chargeable period, starting this November.
Retirement Relief For Farmers
According to the Minister for Finance another key measure for farmers, announced in Budget 2024, was Retirement Relief.
MInister McGrath said this “supports the intergenerational transfer of businesses and farms and works to ensure their smooth transition so that they continue to play their important role in the Irish economy”.
The minister said: “In line with government policy on the age of retirement, I am extending the upper age limit for the relief from 65 until the age of 70.
“The reduced relief which was available on disposals from age 66 onwards will now apply from age 70.”
According to the minister these changes will come into effect from January 1, 2025.
“I will also introduce a limit on disposals to a child up to the age of 70, as recommended by the Commission on Taxation and Welfare,” he added.
(Source – Agriland – Francess Mc Donnell – 10/10/2023)
Budget 2024: Retirement relief age limit on CGT to rise to 70
The upper age limit by which a person can claim full retirement relief under the Capital Gains Tax (CGT) will be raised to 70.
Outlining taxation changes as part of Budget 2024 today (Tuesday, October 10), Minister for Finance Michael McGrath said that retirement relief “supports the intergenerational transfer of businesses and farms and works to ensure their smooth transition so that they continue to play their important role in the Irish economy”.
“In line with government policy on the age of retirement, I am extending the upper age limit for the relief from 65 until the age of 70,” the minister said.
The reduced rate of relief that currently applies for disposals of assets by persons aged between 66 and 70 will apply from the age of 70 after the change comes into force.
The changes will come into effect from January 1, 2025, to allow for an appropriate transition period, Minister McGrath said.
This change will be accompanied by the introduction of a limit on disposals to a child, up to the age of 70.
Retirement Relief
Despite the name, a person does not have to retire from working on a farm or in a business in order to avail of this relief.
The relief can be availed of by persons aged 55 or older when disposing of any part of a business or farm asset.
If a person is aged under 55, they may qualify for the relief if they are unable to continue farming or working in their business due to ill health, or if the reach the age of 55 within 12 months of the disposal.
There are two types of relief, depending on who the asset is disposed to:
- A ‘child’ (including natural child; stepchild; child of a civil partner; adopted child; child of a deceased child; niece or nephew that has worked at the business for five years; or foster child who the disponer has maintained for at least five years before they turned 18);
- Someone outside the family.
For disposals to a ‘child’, the full relief can currently be claimed if the disponer is between 55 and 65. If the disponer is over 66 the relief is restricted to €3 million (the full relief can be claimed up to the age of 70 once the new budgetary measure comes into effect).
If the recipient of the asset disposes of the asset within six years, the relief is withdrawn and the recipient must then pay CGT on the original disposal, in addition to the CGT on their own disposal.
For disposals to someone outside the family, full relief can be claimed when the market value of the disposal at the time it is made does not exceed €750,000 if the disponer is under 66 (under 70 from 2025); or does not exceed €500,000 if the disponer is 66 or older (70 or older from 2025).
If the market value of a single disposal is more than the threshold, marginal relief may apply, which limits the CGT to half the difference between the market value and the threshold.
(Source – Agriland – Charles O Donnell – 10/10/2023)
Budget 2024: DAFM sees total allocation cut to €1.9bn
The budget allocation to the Department of Agriculture, Food and the Marine (DAFM) has been reduced year-on-year to €1.9 billion.
DAFM’s budget will fall by around 17% compared to its 2023 allocation which totalled €2.141 billion to spend in Budget 2023.
However, a budget expenditure report published today (Tuesday, October 10) also highlights that a number of measures have received additional funding for 2024.
These include the Agri-Climate Rural Environment Scheme (ACRES) which will receive €200 million and bovine tuberculosis (TB) testing which has been allocated a €56 million funding package.
CAP
The Department of Public Expenditure has also detailed that the latest budget allocation “expands” the roll out of the Common Agricultural Policy (CAP) with more than €700 million to be provided next year for farmers who participate in environment schemes including ACRES, Areas of Natural Constraint (ANC) forestry and organic farming.
In addition to its budget allocation the department will also administer €1.2 billion of EU funding next year, chiefly for Basic Income Support for Sustainability (BISS) payments to farmers.
The majority of DAFM’s budget – €968.1 million – will be earmarked for its farm sector supports and controls programme which primarily revolves around CAP related schemes.
A further €420.5 million has been allocated to DAFM’s policy and strategy programme which will continue to fund key Bord Bia operations, provide funding for public sector research and innovation and also fund the new Agri-food regulator.
TB Testing
DAFM’s food safety, animal and plant health and animal welfare programme will also receive total funding of €376.5 million in 2024.
According to the department this will enable it to undertake evidence-based TB testing, continue controls on imports of food, animals and plants and border control posts and maintain food safety controls, inspections and audits across a range of food premises that it oversees.
The department’s seafood sector programme has also been allocated a total of €176.9 million.
The total budget allocation of €1,942 million includes a core current allocation of €1,587 million and the National Development Plan core capital allocation of €287 million.
DAFM has also received non-core funding specifically in relation to Covid-19 and Ukraine.
(Source – Agriland – Francess Mc Donnell – 10/10/2023)