Capital Acquisitions Tax Consolidation Act 2003 section 89

Provisions relating to agricultural property

Section 89 provides relief from capital acquisitions tax for gifts and inheritances of agricultural property taken by a qualifying "farmer", reducing the taxable value of such property by 90%.

• Agricultural property (land, buildings, machinery, livestock, etc. in an EU Member State or the UK) taken by a qualifying "farmer" is taxed on only 10% of its market value — a 90% reduction known as agricultural relief.
• To qualify as a "farmer", at least 80% of the beneficiary's gross assets (after taking the gift or inheritance) must consist of agricultural property, and the beneficiary must either actively farm the land, hold a recognised farming qualification and farm commercially for at least 6 years, or lease the land for at least 6 years to someone who does.
• If the agricultural property is sold within 6 years and the proceeds are not fully reinvested in other agricultural property within one year (or 6 years for a compulsory acquisition), the relief is clawed back proportionately on the amount not reinvested; the clawback also applies if the beneficiary ceases to meet the active farmer conditions within the 6-year period.
• Special rules treat land with solar panels (covering no more than half the total agricultural land) as agricultural property, allow a conditional gift of cash to qualify if invested in agricultural property within 2 years, and exempt trees and underwood from the farmer test altogether.