Change in ‘active farmer’ clause is sought by FG TD

UNDER the current regulations, it would be the ultimate nightmare for a young part-time farmer to inherit the land from their parents, according to an East Galway TD.

The vast majority of farmers in County Galway are operating on a part-time basis and this impacts on the inheritance tax they pay. In order to qualify for the maximum rate of tax relief, a young farmer has to spend more than 50% of his time operating the holding, according to Deputy Paul Connaughton.

This rule comes into effect at the beginning of next year but now efforts are being made to have this rule amended. At the moment a parent can sign over the land to their son or daughter and they in turn will qualify for the full tax reliefs.

But following the recent Budget, this will now only apply if they ‘actively farm at least 50% of their time on the land’.

According to Deputy Connaughton there are more part-time farmers in County Galway than there are full-time.“It goes without saying that it is very difficult to make a liveable wage being a full time farmer which is why an off-farm income is vital for survival.

“But under the new rules, a farmer has to spend more than 50% of their time on the land before they qualify for the full tax reliefs. For some, this is an impossible ask,” Deputy Connaughton added.

He said that if this became law, many farmers would not be in a position to transfer their lands to their sons or daughters as it would be financially crippling.

Young part-time farmers are anxiously awaiting changes to the rules that were introduced in the budget. It is understood that Minister Michael Noonan is having another look at the conditions attached to land transfers.

“The Budget made great strides to get land into the hands of people who can commercially work such lands, particularly through long-term leasing.

“But if it becomes a reality, particularly in the west of Ireland where over 60% of all farmers are part-time, there will be large tracts of land that will not be transferred as it would financially ruin small farmers,”  the Fine Gael TD said.

Deputy Connaughton has been in touch with the Finance Minister in the hope of changes being made to land transfer rules.