Feel the Benefits of Five-Year Averaging
Five-year averaging has the potential to offer farmers big tax savings, by reducing tax rates and allowing retrospective claiming of beneficial tax reliefs.
From 2016-17, HMRC agreed farmers could, under certain circumstances, chose to average their profits over two or five-year periods for income tax purposes.
Five year averaging has proved more beneficial than initially expected and has been more widely utilised.
Careful planning is advised as the rules are complex, and must be considered in conjunction with a number of other factors.
When farmers are considering significant capital expenditure which would qualify for capital allowances, the timing of such expenditure is important in the light of averaging.
For further information, or discuss to your specific situation, please contact us on 01633 871122.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.