Adopting an Irish model of Income Tax relief in the UK could boost farmland lettings and increase agricultural productivity by over £100m says the Central Association of Agricultural Valuers (CAAV).
According to a CAAV review of data from the Irish Revenue, the area of let land in Ireland rose to cover 7% of farmland in 2017, compared to just 2% in 2011. This followed an increase in Income Tax relief introduced in 2015 on farmland let for more than five years, according to Jeremy Moody, secretary and adviser to the CAAV.
“This has had a profound effect on encouraging the letting of land and if adopted in the UK could be very beneficial,” he said.
The increased relief starts at the equivalent of £16,000 a year for a five-to-seven-year tenancy, going up to £35,500 for 15-year leases. As a result, around 450,000 acres were newly let for more than five years from 2015 to 2017.
Initial CAAV modelling of applying the same relief to the UK, suggests that if a further 4% of farmland in Great Britain and 15% in Northern Ireland were let in this way, the productivity gain could top £100m.
“Ireland has seen a higher proportion of farmland let for five years or more between 2015 and 2017 than England, Scotland and Wales have under all new forms of tenancy,” said Mr Moody. “Ireland now has 7% of its farmland let for such periods compared to about 5% in Great Britain and none in Northern Ireland.
“There’s much greater potential for land to be let across the UK, it just needs the right encouragement.”
Full details of CAAV review