Farmers could face crippling Capital Gains Tax bills if Minister doesn't act quickly
Farmers letting their land on conacre could find themselves facing a crippling tax bill upon retirement and disposing of the land unless the Government steps in.
The attractive retirement capital gains tax relief package, which was introduced under the Finance Act 2014, is due to cease at midnight on New Year's Eve.
The few farmers who are now aware of the exemption - as publicity surrounding its introduction was close to nil - now find themselves in a race against time to avoid bills running into many thousands of euro.
The failure to extend the relief in the recent budget also went largely under the radar but many farmers approaching retirement after 2016 will get a nasty shock when billed for 33pc of the increase in the value of the land since they took it over.
The Finance Act 2014 currently provides farmers who had previously let their land in the informal arrangement known as conacre - and who ultimately dispose of the holding to a third party (not their child) - a one-off opportunity of exemption from capital gains tax.
The provision allows taxation flexibility on land let on conacre, which is considered an investment asset rather than a business asset such as land farmed by the land owner. Previous to the 2014 legislation, land let on conacre did not meet the criteria for such relief. This meant that many farmers disposing of land let informally faced 33pc capital gains tax bills on disposal of the property to anyone other than their child. As it stands, that situation will resume on January 1, 2017.
The people most affected are small farm owners with no immediate family members to whom they can pass on their land. Many of those affected are elderly, bachelor farmers or those whose family members have all emigrated. In my experience, it's quite common for such farmers to have been renting on conacre for 20 years or more.
Many have been unable to work the land for whatever reason and may have been motivated by an emotional attachment to let their holdings informally rather than sell - perhaps more in hope than anticipation that a family member would return and take it over. Eventually, most agricultural land owners will arrive at an acceptance that such a scenario is never going to unfold and decide on the sensible move - to let the land go.