- Essential to deal with volatile earnings of farmers
Farmers will welcome the Chancellor’s announcement today that the ‘farmers averaging’ tax rules, designed to limit excessive fluctuations in farmers’ tax bills can now be applied over five years rather than over just two consecutive years.
Farmers averaging allows farmers and market gardeners in the UK to prevent excessive increases in their tax bills and advance tax payments if an unusually strong year pushes them into a higher tax band. The rules reflect the fact that farmers suffer from significant fluctuations in profits caused by the weather and increasing influence of world market prices.
Comments Tim Maris, head of our agriculture and rural sector: “Agricultural prices are so volatile that it is hard for farmers to predict their profits at the end of a year.”
“Extending farmers’ averaging so that it can be applied over a 5 year period will make it much easier for them to plan and budget both for their tax bills and for their business generally.”
“Looking ahead, farming profits will be static at best if based on the fall in commodity prices that occurred late in 2014 and this is likely to continue through 2015 and into 2016. The new rules should help offset the impact of farmers’ 2013 earnings, when prices were higher.”