Land mobility: Calls for tax relief to support scheme in NI

Northern Ireland’s Land Mobility manager has called for tax relief similar to the Republic of Ireland to encourage landowners to move away from conacre in favour of longer-term tenancies.

John McCallister, who runs the scheme on behalf of DAERA, CAFRE and the Young Farmers’ Clubs of Ulster said tax changes would greatly facilitate the long term transfer of land from older farmers to the next generation.

“This has already happened in the Republic of Ireland, where a 2017 agri-taxation review confirmed that access to land and low levels of land mobility are two of the core challenges facing farmers who want to increase their productivity,” he said.

“The review also recognised a consensus that the actual use of land is becoming more of an issue than ownership.

“In the wake of these conclusions, changes were made to the tax system in the Republic, which have greatly encouraged land mobility.

“All stakeholders with the farming and food sectors, including our politicians, must take up this case in the strongest possible terms. And the clock is ticking.”

In practical terms, the tax changes introduced in the Republic of Ireland have seen the fraction of farmed area that is let on ‘arm’s length’ terms for five years and more growing from 2% to almost 7%.

Approximately 450,000ac have been newly let on such terms in just the three years since the enhanced reliefs were available, with that land coming from in-hand farmland, as well as land that had been let out on seasonal conacre.

Tax relief in the Republic of Ireland

In the South, relief is tapered depending on the length of the tenancy, with longer tenancies generating a bigger benefit.

Landowners over 40 are exempt from income tax on lease income on medium and long-term land leased to individuals who are not connected to them as defined by Revenue.

In the Republic, relief applies as follows:

  • A lease period of 15 years or more – €40,000 exempt income per year;
  • 10 to 15 years – €30,000;
  • Seven to 10 years – up to €22,500;
  • Five to seven years – up to €18,000.

The annual income tax relief is per landowner, so if the land is jointly owned by two landowners, the thresholds are doubled.

‘A game-changer’

According to John McCallister, analysis carried out by Jeremy Moody of the Central Association of Agricultural Valuers indicates that the replication of similar trends in the UK, would see farm productivity increase by around £100 million across England, Scotland, Wales and Northern Ireland.

Suggestions were made at the launch of the second phase of the Land Mobility Programme today (November 27), that the proposal could even be cost-neutral, as more profitable farms will generate more income tax revenue for the Government in return. However, no official projections were made for the cost of such a scheme.

Ulster Farmers’ Union deputy president Victor Chestnutt added: “The UFU has a vision of a sustainable, productive, profitable and progressive farming sector. We are actively engaged in the debate about how we should harness public policy and investment to support our farm sector.

“The answer is that there’s nothing more important than the food we eat. It’s clear that food and farming matters to the UK.

Farm profitability is ultimately the key to achieving generational renewal and the land mobility project will only work if farm profitability is there.

“However, additional measures can be introduced to help facilitate this process. There must be a stronger focus on longer-term land tenure, and particularly the need for generational renewal.

“I would urge those from Government here today to look closer to home at the actions taken in the Republic of Ireland, where they have already delivered useful land tenure and succession structural changes through legislative support and taxation relief. I think it would be a game-changer here in Northern Ireland too.

“There’s nothing sadder than seeing a farmer who doesn’t know to quit. He maybe had been a good farmer in his day but age has got the better of him and he doesn’t know to ease off and he plods on and things fall down around him – there’s nothing sadder than that.”

Those interested in the scheme can contact John McCallister on: 078-3366-8602; or email him on: [email protected]