Changes have been made to the rules which allow farmers to average their profits for tax purposes. Under the new rules unincorporated farmers will be able to average their profits for income tax purposes over five years rather than the previous two years.
The amendment to the rules which took effect from 6 April 2016 is aimed at helping farmers with fluctuating profits better manage the 'risk and the impact of global volatility which has become an inherent feature of the agricultural industry'.
Chancellor George Osborne said:
'… reforms will provide farmers with additional security to plan and invest for the future, allowing them to spread profits over a longer period of time. Over 29,000 farmers can benefit from the changes, saving an average of £950 a year.'
As well as having the new option to average tax over five years, farmers will also retain the choice to average profits over two years.
If you would like guidance on how these rules will affect you please get in touch.
Internet link: Gov.uk publications