The limits of agricultural relief - How not to get hit with a massive tax bill when inheriting land
Martin O'Sullivan looks at the fine detail of Agricultural Relief tax breaks for farm families
If a day passes that I do not receive a query on the tax implications of farm succession it's probably because the day is good and farmers are out making the metaphorical hay while the sun shines.
However, in the past eight months there have not been too many such days and hence the stream of queries has been constant.
I generally enjoy dealing with readers' queries as more often than not I am the bearer of good news - the incidence of tax arising on farm transfers or inheritances is very low and the enquiring farmer is so thankful and relieved that I am made to feel that I have had an influence in saving him or her from the clutches of the taxman.
In this article I will deal with a recent query I received that appeared on first reading to be a straight forward Agricultural Relief query case, but on closer investigation was far from simple.
Most farmers who have given some thought to the question of succession will be aware of Agricultural Relief and the various percentage limits associated with this relief (see table below).
There is firstly the 80pc asset test where 80pc or more of the successor's gross worth on the valuation date must comprise farm assets.
Then there is the 90pc reduction in taxable value as a result of qualifying for Agricultural Relief. Since the 2014 changes in CAT (Capital Acquisitions Tax) rules, a further two percentage limits have come over the horizon.
Firstly, there is the 50pc weekly working hours requirement for successors who do not have a Green Cert or equivalent, and added to that is a requirement that in cases where the land is to be leased to a qualified or full-time farmer, 75pc of the agricultural property on which relief is claimed must be leased for qualifying farming purposes.