Favourite nephew or niece relief
A nephew or niece normally has a tax-free threshold of €44,000. If you've worked on your uncle's or aunt's farm for the five years before you take it over, this relief lets you use the €420,000 threshold that a son or daughter gets.
In short
- You must be the child of the owner's brother or sister (or of their civil partner).
- You must have worked in the farm business for the 5 years immediately before the gift or inheritance.
- It only applies to assets used in the business. Other assets use the Group B threshold.
- It works alongside agricultural relief, and the two together often bring the bill to zero.
Who qualifies
You qualify if you're the child of the owner's brother or sister, or the child of their brother's or sister's civil partner. It doesn't work the other way around: an uncle or aunt inheriting from a nephew or niece is in Group C. Grandnephews and grandnieces don't qualify either.
The work test
For the 5 years immediately before you take the gift or inheritance, you must have worked for the owner in the business:
- for more than 24 hours a week at the place where the business is carried on, or
- for more than 15 hours a week, if the business is run only by you and the owner (or the owner's spouse or civil partner).
If the farm was left to someone else for their lifetime first, the 5 years are counted back from the owner's death, not from when that life interest ends.
What it covers
The relief applies to assets used in the farm business, such as land, buildings, stock and machinery. Other assets, such as savings or a house that isn't used in the business, stay under the Group B threshold of €44,000. Where you inherit both, debts are split between the two groups.
A worked example
Ciarán has worked full-time on his aunt's farm for 12 years. She leaves him the farm, worth €2,500,000. He passes the tests for agricultural relief, so the farm is taxed on 10% of its value.
| Taxable value after agricultural relief | €250,000 |
|---|---|
| Tax as a nephew (Group B) | (€250,000 − €44,000) × 33% = €67,980 |
| Tax with favourite nephew relief | €0, because €250,000 is under the €420,000 Group A threshold |
How to claim
Claim it on the IT38 return. On the Disponer Details page, choose "Child of Brother or Sister" as your relationship. Then tick "Favourite Nephew/Niece Relief" on the Reliefs and Exemptions page.
Common questions
Who can claim favourite nephew or niece relief?
The child of the owner's brother or sister, or of their civil partner, who has worked in the farm business for the 5 years immediately before the gift or inheritance.
How many hours must I have worked on the farm?
More than 24 hours a week at the farm, or more than 15 hours a week if the business is run only by you and the owner, or the owner's spouse or civil partner.
Does the relief cover everything I inherit?
No. It covers assets used in the farm business. Other assets, such as savings, stay under the Group B threshold of €44,000.
Choose "Nephew or niece" in the calculator, tick the work test, and you can see the difference the relief makes.