Farmers’ averaging calculation
In the recent Budget, the Government announced that it would extend the period for which self-employed farmers can average profits for income tax purposes from 2 to 5 years.
The averaging facility helps farmers by allowing them to spread profits over consecutive years to offset the effects of volatility on profits. Increasing the period for averaging profits from 2 to 5 years will provide additional assistance.
Broadly, where an averaging claim I made from 2016/17, the averaging period will be the year of claim and the previous 4 tax years. So, for example, an averaging claim for tax year 2016-17 would result in the profits of tax years 2012/13 to 2016/17 being calculated by reference to averaging.
HMRC has issued a consultation to explore ways in which the extension to a 5-year averaging period could be designed and implemented and is seeking views on the options presented.
Full details are available at www.gov.uk
Date: 21st July, 2015
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