Why farm succession is much more than just an inheritance issue
Through the medium of RTÉ Brainstorm, Farm Management Specialist at Teagasc, Kevin Connolly explained that the reality of farm succession among families can be a complex and emotionally charged affair which shapes our agricultural future.
What does it actually mean for a farmer to hand over the family farm? On paper, it can look straightforward: documents signed, tax dealt with, and the younger farmer takes over. The reality can be very different. It can be one of the most complex and emotionally charged decisions a farm family can make and it is not simply an inheritance event.
Farm succession is not solely a private family issue, nor is it just a technical tax discussion. It is being worked out around farm family kitchen tables, but it is also a wider question about who controls agricultural land, whether younger farmers can take charge and whether older farmers can step back with dignity and security.
Around the kitchen table
A farm is rarely just an asset. It is a business, a home and, for the outgoing generation, a lifetime’s work and a large part of their identity. For the next generation, the challenge is almost the reverse. They may be ready to take on responsibility, invest and modernise, but lack legal standing until a formal handover occurs.
In practice this can mean a son or daughter running the farm day-to-day but unable to sign for a bank loan or make key management decisions without permission from the outgoing generation ‘boss’. Meanwhile, older farmers may struggle with stepping back from their lifelong role, while non-farming siblings can feel anxious or excluded from discussions.
There is also another scenario that is often overlooked. For some families, identifying a successor is the obstacle that stalls the process before it starts. Children may have chosen careers away from the farm, may not want to farm or several family members may have different expectations.
Family succession is about keeping the farm within the family while farm succession is about ensuring ownership, responsibility and management of a viable business move to the next generation of farmer, whoever that may be.
This highlights an important distinction – family succession is about keeping the farm within the family while farm succession is about ensuring ownership, responsibility and management of a viable business move to the next generation of farmer, whoever that may be. The two can coincide, but they are not the same thing.
Where there is no family successor, leasing, partnerships and other collaborative arrangements can let a farm remain in productive use and give a younger farmer access to land and responsibility.
Why the public has a stake
A recent report from the Commission on Generational Renewal found that 96% of Irish farms are family-owned, while less than 1% of agricultural land is sold on the open market each year. Most agricultural land therefore changes hands through succession or does not change hands at all.
That has implications for younger farmers whose access to land often depends on a carefully managed transfer. A delayed handover can postpone essential investment and leave a viable farm drifting into stagnation, whereas a supported successor is more likely to invest and modernise.
That matters to farming families, but it should matter just as much to the rest of us. A viable farming sector with young farmers coming through underpins home-produced food, an actively managed countryside and more vibrant rural communities.
Supports that help that handover happen such as fair tax treatment and one-to-one advice at Teagasc’s Transferring the Family Farm clinics are an investment in the future of farming the wider public has good reason to welcome.
The important question for tax policy is not simply whether a relief should be more or less generous. It is, what do we want the tax system to achieve when a working farm passes from one generation to the next.
What tax reliefs do
Passing on a farm can trigger three distinct tax bills – Capital Acquisitions Tax (CAT) for the person receiving the farm, Capital Gains Tax (CGT) for the farmer handing it over and Stamp Duty on the legal transfer. Because farmland carries high market value but relatively low farm cash returns, tax safety nets in the form of reliefs exist so that family transfers are not blocked by unaffordable tax bills.
Each tax is paired with a specific relief:
- CAT Agricultural Relief reduces the taxable value of farmland for the person receiving it
- CGT Retirement Relief shields older farmers from heavy tax bills when transferring an active business
- Young Trained Farmer Relief waives Stamp Duty for qualified young successors
These reliefs have, however, come into sharper focus around Budget time amid concerns, acknowledged by the Department of Finance, that tax reliefs are sometimes used primarily for tax efficiency or land holding rather than supporting an active, working farm handover.
Yet the farm families attending Teagasc’s clinics and accessing its Generational Renewal Week, content, are dealing with a much more basic problem: how to transfer a working family business while maintaining the relationships that are vital to its future.
What should successful succession achieve?
The important question for tax policy is not simply whether a relief should be more or less generous. It is, what do we want the tax system to achieve when a working farm passes from one generation to the next.
A successful succession should produce four outcomes: A viable farm business, not weakened by the change; a secure outgoing generation, with income, housing and financial security; a real successor, with the certainty and authority needed to run and invest in the business; and a legitimate public outcome, where land remains in productive, sustainable farming rather than succession becoming a mechanism for transferring wealth.
That is why farm succession deserves to be treated as more than an inheritance issue, and why it deserves the wider public’s support, not just a farm family’s attention. It shapes who farms our land, whether rural Ireland has a future generation working in it, and whether the country can keep producing its own food. That distinction matters to farm families, to younger farmers seeking a route into the industry, and to everyone with a stake in how Ireland’s agricultural land is managed.
The above was first published in RTÉ Brainstorm and was adapted for use on Teagasc Daily.