Inheritance Tax Changes for Supported Farmers Explained

My father wants to transfer the farm to me. I have been a home farmer with my dad since I left college. His health is precarious and we as a family are concerned that he will need to be treated in a nursing home for the foreseeable future and are obviously concerned about the cost. I’ve heard that there have been changes in the Fair Deals Scheme, but I’m not sure if we as a family are eligible to take advantage of the positive changes. Can you explain if they would be applicable to our situation and what should we do?

Dear reader,

Under the Nursing Home Support Scheme Act 2009 (the scheme is known to many as the Fair Deal scheme), farm assets that have been transferred within five years of the filing of the application for State aid or ancillary state aid will be taken into consideration for the purposes of calculating the applicant’s means.

An eligible applicant must provide 80% of assessed income and 7.5% of assessed assets each year. Payments are capped at three years.

This means that, with regard to the main private residence, the maximum contribution that may apply is 7.5% of the value of the residence for the first three years of custody.

This means that the farm is included in the valuation of assets unless it was transferred to you by your father more than five years ago.

However, there has been a new change in the Fair Deal Scheme with respect to farms and indeed all businesses introduced on October 20, 2021, whereby the three-year cap also applies to these assets if certain conditions are met. fulfilled.

The conditions are:

  • You must apply for the appointment of your farm successor who must operate the farm for at least six years. The successor must be at least 18 years old and be a child, nephew, niece, grandchild, brother, half-brother, uncle, aunt, son or daughter-in-law or parent or step-parent. A successor cannot be appointed until the applicant (the person in need of care) is taken care of. A request must be submitted as soon as possible so that the six-year period can begin to run.
  • Your farm must be operated by you, your partner or your proposed family successor for at least three of the past five years. A legal charge must be placed on your title to your farm.

You must apply to the HSE if you want the operation to be capped at the three-year period. The HSE can review your application and verify that you meet the conditions during the six-year period.

You must prove that the farm was actively operated by you or your farming successor. You will need to produce proof of the DAFM, such as a herd number registered with herd owner status for each year since the family successor was appointed or a sheep herd number.

Other evidence may include proof that you produce and deliver milk to a registered milk buyer and certified farm accounts and documentation of hay and silage sales. You need to make sure you keep records for each year.

This is a welcome development after years of lobbying by the IFA and other organizations. Farmers who are currently in nursing homes before the new law goes into effect can still apply to cap the farm at three years and must apply by April 20, 2022, and must do so as soon as possible.

  • Karen Walsh, originally from an agricultural background, is a lawyer at Walsh & Partners, Solicitors, 17, South Mall, Cork (021-4270200), and author of Farming and the Law. Walsh & Partners also specializes in personal injury claims, transfer of ownership, probate and family law.

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While every precaution is taken to ensure the accuracy of the information in this article, Attorney Karen Walsh accepts no responsibility for any errors or omissions, and you should seek legal advice regarding your particular situation. as soon as possible.

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