An important relief from stamp duty frequently availed of in transferring family farms is in the process of being phased out. Anyone considering a farm transfer should be aware of the rules and consider whether they affect future plans.
Known as consanguinity relief, the rule halves the rate of stamp duty (from 2% to 1% of market value) on transfers of land between family members. The relief was originally available on all property transfers but was removed from transfers of residential property after 2010 and commercial property after 2014. It remains available for agricultural land transfers until the end of 2017, subject to conditions.
Consanguinity relief is mostly relevant to transfers of agricultural property where the transferee (the farmer receiving the land) does not qualify for an alternative relief, such as young trained farmer relief. A wide range of relatives can benefit from consanguinity relief, but for transfers after January 2015 the land must be farmed or leased for farming for a period of at least 6 years from the date of transfer and the farmer must either have a relevant qualification, such as a Teagasc green certificate, or spend at least 50% of their normal working time farming on a commercial basis. From January 2016 an additional condition is imposed: the person transferring the land must be under 67 at the date of the transfer.
Consanguinity relief expires entirely on 31 December 2017 and all transfers of agricultural land will be subject to stamp duty at the full rate of 2% of the market value of the land, unless another relief is available. The changes do not affect young trained farmer relief which provides a full exemption from stamp duty for qualifying farmers under 35. Young trained farmer relief is due to expire at the end of 2015 but is usually extended in the Budget.
Farm businesses should be aware of the change and consider whether it will impact on any future succession planning. Pay particular attention to the Budget on 13 October 2015 and take professional advice on any proposed transfer.