17 July 2017
We wrote about the introduction of the new five year averaging rules in our 2017/18 Rural and Agriculture Sector Outlook and now we are actually in the process of considering whether or not it’s worthwhile on a client by client basis.
I have to admit to being a little sceptical at the time of George Osborne’s announcement of the rules, and with the likelihood of farming profits being at best flat, I could not see that there would be a large benefit to be gained – especially when you take into account the two year averaging rules. However, it is always worth taking a more considered look at such announcements with real figures, because there is real tax at stake.
I am therefore happy to report that in certain cases there is a benefit in the new five year averaging rules. We have seen some clients save four times as much tax as they would have saved if the only option was the two year averaging adjustment, so the new rules are definitely a benefit worth having. There’s no doubt that you’ll bring a smile to a farmer’s face when you tell them their tax bill is less than they were expecting! With the 31 July payment on accounts due shortly this is very good news.
When your accountant prepares your 2016/17 tax return make sure they have considered the new averaging rules and ask them to confirm the tax adjustment that would result from applying them. If they look at you blankly then it may be time to contact your nearest UHY office and speak to a rural specialist.
If you would like to discuss the averaging rules or the taxation of farmers please do not hesitate to contact me or your local UHY rural and agriculture expert. Alternatively, download the aforementioned Rural and Agriculture Sector Outlook and go to page 17 to learn more about how the five year averaging rules could benefit you.
