A new initiative to encourage farmers to begin the process of transferring their farms to a younger generation has been included in the Budget.

The new initiative, called the family transfer partnership, was recommended in the Agri-Taxation Review which was completed in 2015.

Under the scheme, the State will provide a tax credit worth €5,000 per year for five years for those who set up "family transfer partnership" in a structured way to enable younger family members to take over the family farm.

The scheme is aimed at incentivising earlier intergenerational transfers of farms.

There were a number of barriers to such transfers identified in the review in 2015, including the requirement for two generations to derive an income stream from the farm and concern about financial security for the older generation.

In addition, it was considered that the full transfer of the family farm under previous incentives was considered to be too abrupt in many circumstances.

This new scheme is aimed at addressing those concerns.

Family members will have to enter into a partnership with appropriate profit sharing agreements and with the provision for the transfer of the family farm to the young farmer at the end of a specified period, which cannot exceed ten years.

To support this arrangement, a tax credit up a maximum of €5,000 per year for a five-year period will be allocated to the partnership and can be divided according to the rules of that partnership between the older and the younger farmer.

The Department of Agriculture said that the partnership model will enable a gradual transfer of control of the farm and will also facilitate knowledge transfer from one generation to another.

It is expected that this measure will cost the Exchequer in the region of €10 million per year.