Amendments to the Finance Bill were published earlier this week and provide clarity regarding the exemption from income tax of certain income arising from the leasing of farmland.

There had been some confusion regarding the wording of the text in the original Finance Bill, which questioned if income tax relief could continue to be claimed on leased land.

The Finance Bill has amended the definition of the ‘qualifying lessor’ and clarifies that the loss of the exemption only relates to purchased lands.

A seven-year holding requirement has now been placed on lands purchased after 1 January 2024.

This means that such lands will only be eligible to avail of income tax relief after a period of seven years.

The requirement to own the land for seven years prior to letting it out under a qualifying lease will not apply to persons who have acquired the lands other by way of purchase, eg through inheritance or gift. Such individuals will continue to be able to avail of income tax relief once all other conditions for claiming the tax are satisfied.

IFA farm business chair Rose Mary McDonagh said: “The amendment to exempt gifts and inheritances is vitally important to ensure land mobility is not impacted as a result of these changes.

“There was a real concern among farmers that land transferred via gift or inheritance would be impacted by the changes to the tax treatment of land lease income that were announced in Budget 2024. The recent amendments ensure this will not be the case, which is a positive outcome.”