As flagged for some time in advance of today in the media, the changes to the inheritance tax position in Budget 2016 announced officially today, October 13, 2016, is as follows
- that the current Group A threshold which applies primarily to gifts and inheritances from parents to their children is being increased by €55,000 from €225,000 to €280,000 (a saving at the rate of 33% of €18,150) in respect of gifts or inheritances received on or after tomorrow, 14th October 2015.
Other capital measures relating to succession are
- the introduction of a farm succession transfer partnership model, subject to EU State Aid approval (see quote from Min. Noonan on this below);
- a revised CGT relief for entrepreneurs from 1/1/16 where the rate is reduced from 33% to 20% subject to a limit of €1m chargeable gains on the disposal in whole or in part of a business;
- the Local Property Tax (LPT) revaluation will be carried out in 2019 rather than 2016 as previously applied.
Minister Noonan confirmed that the purpose of the farm succession transfer partnership model is "to provide increased certainty about the timing of the transfer of a family farm to the next generation of farmers. This will greatly assist with long-term planning and farm productivity. The proposal, which is subject to state aid approval, will allow two people, for example family members, to enter into a partnership with an appropriate profit-sharing agreement which makes provision for the transfer of the farm to the younger farmer at the end of a specified period, not exceeding ten years. To support this transfer, an income tax credit worth up to €5,000 per annum for five years will be allocated to the partnership and split according to the profit-sharing agreement".
