Capital gains tax, CGT, is a tax on a capital gain arising on the disposal of assets. A 20% rate of CGT applies on the gains arising on the disposal of assets, including farm land. It was announced in the 2003 budget that no roll-over relief would be allowed for any purpose on gains arising from disposals on or after 4 December 2002. This relief was introduced when CGT rates were much higher than current levels. In effect, it was a deferral of tax to be paid where the proceeds of disposal were re-invested into replacement assets. The taxation of these gains would take place following the eventual disposal of the new assets without their replacement.
The abolition of this relief was in accordance with the overall taxation policy of widening the tax base to keep direct tax rates low. Such reliefs and allowances made sense when CGT rates were 40% and more. As the Deputy may be aware, the rate was halved from 40% to 20% in the 1998 budget. Taxing capital gains when they are realised is the most logical time to do so, and this change brought CGT into line with other areas.
With regard to stamp duty, any such concession mentioned by the Deputy would lead to calls from other sectors for relief for their particular situations, with an adverse effect on the stamp duty yield. The Deputy may be aware that the stamp duty code already contains full stamp duty relief for transfers of land to young trained farmers where land is transferred to them by way of gift or sale, provided they have attained relevant educational qualifications. The availability of this relief was extended in the 2003 budget for a further three years to 31 December 2005. The Finance Act 2004 provided for an updated list of educational qualifications and contained changes which resulted in the raising of the standards of certain of those qualifications which must be attained to qualify for the relief.
As Deputies are aware, it is not the practice to comment in the lead up to the annual budget and Finance Bill on the intention or otherwise to make changes in taxation.