Young Farmer Incentives
INCENTIVES SECURED BY MACRA FOR YOUNG TRAINED FARMERS
Abolition of Stamp Duty on Farm Transfers to Young, Trained Farmers Young, trained farmers are currently exempt from stamp duty on receipt of a land transfer. This is a very important measure for young farmers and is secured until December 31, 2015.
100% Stock Relief for Young, Trained Farmers for their First Four Years in Farming The stock relief measure available to young, trained farmers is of significant benefit as it enables them to offset any increase in the value of stock against their tax liability on book profits. This measure effectively aids young farmers to build up stock numbers during their first four years in farming. This relief is secured until December 31, 2015.
Stock Relief for Partnerships A new 50% stock relief provision for registered dairy farm partnerships and 100% stock relief for certain qualified young farmers was introduced in the last budget. This relief is available till December 31, 2015.
Young Farmer Single Farm Payment Top up For the first time in the history of the Common Agricultural Policy there is a chapter dedicated to young farmers which consists of a mandatory top-up on direct payments in the first years of farming. Macra through CEJA had proposed the idea of a support measure for young farmers to assist them in establishing their farm business and to address the age profile in the sector. In the CAP agreement in June 2013 a provision for up to 2% of funds in pillar 1 for provided for a mandatory 25% top up on Single Farm Payment for new entrant young farmers under 40 years for their first five years of installation. For further updates on CAP measures for young farmers contact Derrie Dillon on 01 426 8904.
Single Payment National Reserve Farm The Single Farm Payment National Reserve for 2013/2014 is not available due to lack of resources to replenish the reserve. However, as part of CAP reform 2015 a new SFP National Reserve will be created. For the first time young farmers with low or no entitlements will be a priority within the National Reserve.
Supports for young farmers in the Rural Development Program A combination of measures for young farmers in Pillar 2 of the Rural Development Program in the CAP can include business start-up grants, general investments in physical assets and training and advisory services. Recommendations for Rural Development policy in relation to young farmers are compiled in the Macra/CEJA Dublin Declaration titled ‘RDP – Delivering for young agri entrepreneurs 2014-2020’.
Milk Quota Exchange Young trained farmers under 35 years of age are eligible for 25% of the milk restructuring scheme. The scheme entitles young farmers to priority access to 25% of the milk restructuring pool up to 350,000 ltrs (77,000 gls).
The introduction of New Entrant Parent Partnership
Dairy Partnerships Subject to conditions, new entrants are able to acquire milk quota in their own names without having to establish separate facilities. This scheme has eliminated the inefficiencies that were created with the need to establish separate milking facilities in order to be regarded as a new entrant.
Dairy Partnerships Macra lobbied for a broadening of the dairy partnership rules to facilitate ‘non-traditional’ new entrants to dairying by forming a milk production partnership with an existing dairy farmer. These new entrants and farm managers are treated as an individual for the purpose of purchasing milk quota under the restructuring scheme.
New Entrant Dairy Scheme As part of the 1% per annum increase in milk quotas under the CAP Health Check Macra lobbied for the introduction of a new entrant dairy scheme. The scheme allows non-traditional new entrant to dairying, subject to criteria, to acquire a once of 200,000 litre milk quota allocation as a license to produce milk. This scheme is now closed to new entrants.
100% tax relief on milk quota purchased Young farmers are eligible for 100% tax relief on milk quota purchased since 2000. This tax allowance is a valuable source of assistance to young farmers who are committed to the development of their enterprises.
No VAT on Single Farm Payment transfers The transfer of Single Farm Payment entitlements by gift is now VAT exempt. Macra secured this relief under the current Social Partnership deal, Towards 2016, Ten-Year Framework Social Partnership Agreement 2006-2015.
Changes to transfer tax codes Macra secured changes to the ‘transfer tax codes’ arising out of the introduction of the new entitlement regime under the Single Farm Payment. Single Farm Payment entitlements were included under the definition of a qualifying agricultural asset allowing farmers to avail of reliefs under Capital Gains and Capital Acquisitions Taxes and young trained farmers’ Stamp Duty Relief.
Land Leasing Macra secured exemptions for individuals leasing out their land on a long-term basis to €12,000 for leases of between five and seven years and €15,000 for leases of seven years or longer. Increasing the relief encourages farmers to long-term lease their land and Single Farm Payment entitlements and increasing the supply of land available to young trained farmers. There is also a tax exemption of €20,000 for ten year leases.
Recent announcements my Minister Coveney on SFP and RDP include:
- Allocation of the full 2% of the national financial ceiling to fund a top-up payment of 25% for a period of five years to young farmers under 40 years of age. This is equivalent to a grant of up to €16,000 on 50 hectares, and compares favourably with the Installation Aid that was available under the current Rural Development Programme,
- Additional educational criteria to be satisfied to ensure that payments are made to genuine young farmers, and
- A national reserve of 3% of the Basic Payment Scheme ceiling will be set aside for the allocation of payment entitlements on a priority basis to young farmers.
Rural Development Programme
- Dedicated strand of on-farm capital investment support will be ring-fenced for young farmers, with higher aid intensity rate of 60% (compared to general rate of 40%),
- Young farmers likely to benefit in particular from €20 million per year expenditure on knowledge transfer and innovation measures that will help to embed best practice and innovative solutions across the agri-food sector, and
- Support to partly offset the start-up cost of approved collaborative farming arrangements, which are of particular interest to young people as a pathway to commencing farming.
For more information, contact Derry Dillon Macra na Feirmes Agricultural Affairs and Rural Development Manager on on (01) 426 8904.