How will the increased CAT thresholds affect the farming industry?

David Barry, Tax Director, provides initial reaction on how Budget 2025 will affect farmers and the agribusiness industry.

Land Use

"In the latest budget, the government has implemented revisions to agricultural reliefs to ensure the disponer must hold the land as an active farmer for 6 years prior to transfer. this along with the prior changes is to direct these benefits towards genuine farming families and enterprises more accurately. 

"This strategic adjustment ensures that these reliefs support those actively engaged in farming rather than serving as a tax-efficient mechanism for passing on substantial wealth through land purchases. 

"Previously, individuals could acquire up to €3.35 million in land to transfer it tax-efficiently to their heirs. 

"This practice could inadvertently drive up land prices and present barriers to entry for young farmers. This additional holding period to the legislation in addition to prior years seek to mitigate such outcomes, fostering a more sustainable and accessible agricultural sector."

Increased Capital Acquisition Tax (CAT) thresholds

"The announced increase in the CAT (Capital Acquisitions Tax) bands is a significant and welcome change, underscoring its importance in the recent budget statement. However, the effectiveness of this adjustment hinges critically on the specific wording in the forthcoming Finance Bill and its subsequent implementation. 

"The revised bands must be accessible to all, including those who have previously utilised the threshold of €335,000. These individuals should be entitled to benefit from the additional €65,000 increment, aligning their total exemption with the new threshold of €400,000, just as those who have not yet used the previous limit. 

This approach will ensure fairness and uniform benefit from the policy change."