Land-leasing tax reliefs in the firing line

There is a growing expectation that the Government will curtail the tax reliefs available for long-term leasing of land in the next budget.

While the Department of Finance declined to comment when asked if the tax reliefs were under review, farmer representatives have admitted the measure is likely to be significantly amended in the coming budget.

Pressure for a revamp of the tax relief has intensified in recent months as dairy farmer demand for land has pushed the land rental market into overdrive. The base price for rented land in some areas is now over €350/ac, with almost double that paid this week in Laois.

Tillage and drystock farmers have struggled to retain rental ground in the face of growing competition from dairy farmers, who need extra land to stay within new nitrates stocking rate rules.

“The tax relief was introduced to increase land mobility and allow young farmers into farming, but it’s no good if all the land is going in one direction,” a leading Government TD admitted.

It is understood measures to incentivise the leasing of land for the tillage sector are being considered by the Department of Agriculture, but farmer representatives have questioned how one enterprise can be prioritised above another.

Revenue figures show the tax relief cost the national purse €23.7m in 2017 and €31.3m in 2019, while the 2022 figure is expected to be in excess of €35m.

The latest surge in leasing prices could see it top €40m this year.

Landowners can earn up to €40,000 tax-free where the land is leased for over 15 years.