Under new rules, initially announced in the 2015 Budget, farmers will be able to average their profits for Income Tax purposes from two years to five years.
This change will help farmers with fluctuating profits better manage risk and level out the impact of tax on their farming profits. For example, they may avoid paying tax at higher income rates in one year, when in the next few years they may have significantly lower profits.
In recent times market conditions, driven by the impact of global volatility, make it difficult to budget for tax costs.
Chancellor George Osborne is reported as saying:
“A resilient and thriving food and farming industry is fundamental to the success of the UK economy. This government recognises the challenges our farmers face from volatile markets and we are absolutely committed to supporting them.
Today’s 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.
The fairer tax system for famers is among a number of reforms to taxes, National Insurance allowances and others measures coming into effect today to back hard work, support savers and economic security at every stage of life.”
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. The dual option, announced in December, follows industry feedback in consultation over how to deliver the extension to five years. It became evident that the two-year option was well understood and had provided significant relief to farmers dealing with financial pressures and should be retained.
- Reduction in support for hospitality sector - October 14, 2021
- Tax year end – all change? - October 13, 2021
- Better late than never - October 7, 2021
- New measures to ease fuel supply chain pressures - October 5, 2021
- Tax Diary October/November 2021 - October 4, 2021
- Students are warned of tax scams - October 4, 2021
- Data easing for the UK? - October 4, 2021
- NIC increase – now you see it, now you don’t - October 4, 2021