Gift and Inheritance Planning
Gift and Inheritance Planning

Gift and Inheritance Planning

In the first of our series on inheritance and gift planning we outline below one of the principal reliefs available to reduce the tax bill.

Agricultural Relief

Agricultural Relief can provide an up to 90% reduction in the value of certain gifts or inheritances of agricultural property for CAT purposes.

 

The Relief is subject to some conditions, including (but not limited to):

 

1.   The assets received must constitute ‘agricultural property’, which includes:

  • Agricultural land, pasture, and woodlands in the EU
  • Crops, trees, and underwood growing on such land
  • Farm buildings and dwelling houses that are proportionate in size and character to the farming activities
  • Single farm payments and milk quotas
  • Farm machinery and livestock situated on the agricultural land.

 2.   The beneficiary must satisfy the ‘80% agricultural property’ test i.e., the ‘farmer test’. To be regarded as a farmer:

  • At least 80% of the gross market value of the property to which a person is beneficially entitled to in possession, including the relevant gift or inheritance, must be agricultural property
  • The test is a point in time test on the valuation date

 3.   The beneficiary must also be an ‘active farmer’. This can be met as follows:

  • Farm the land as an active farmer spending at least 50% of your working time farming the land or 20 hours per week
  • Be a qualified farmer and farm the land by having been awarded an appropriate qualification, or
  • Lease the land to an active farmer or to a qualified farmer.

 Additional Points to Note 

  • There is no minimum ownership period for agricultural property prior to making a gift or inheritance.
  • There is a 6-year clawback period for the Relief.
  • It may be possible to plan to meet the 80% agricultural property test prior to receiving a relevant gift or inheritance.
  • Farm machinery and livestock that transfer on their own without the agricultural land will not qualify for the Relief.
  • The beneficiary can also lease land to an active farmer or to a company the main shareholder of which is a working director who is farming the agricultural property.
  • The gift of cash on condition that it is invested in agricultural property within 2 years of the date of the gift can also qualify for the relief in certain circumstances, even when the donee is not directly involved in farming activities themselves.
  • The costs associated with the transfer of agricultural property are not included in the gross value of the agricultural property.
  • The relief can be utilised very efficiently as part of a wider inheritance tax planning exercise.
  • In addition, Agricultural Relief can be availed of in connection with very generous Stamp Duty reliefs (Consanguinity Relief and Young Trained Farmer Relief) as well as CGT relief (Retirement Relief).

 If you would like to discuss further planning please contact our team who have considerable expertise in this area.



Please note: The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

Warren & Partners are a boutique Irish tax and business advisory firm based in Ballsbridge, Dublin. Our experienced-team of tax advisors will create unique tax solutions for your specific business needs.

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David Kehoe
David Kehoe

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