The changes aim to ensure the tax system continues to support farmers with fluctuating profits as part of the overall objective of encouraging a more efficient, productive and resilient agricultural industry. In this article, I recap the existing averaging rules and explain the proposed new rules.

The proposed new rules are detailed in draft Finance Bill 2016 clause 19, published on 9 December 2015, and are expected to save taxpayers £10m in the first year and £30m per year thereafter.