Government consults on five-year rule for averaging farmers' profits

The move to five year averaging for farmers' profits is likely to go ahead for 2016-17 as the government releases a consultation to finalise details for the new rules, setting out two options for review

The plan is to extend the averaging period for farmers from two to five years, first announced in the coalition Budget in March.

Under the proposals, the period under which self-employed farmers can average their profits for income tax purposes will be extended from two to five years, with effect from tax year 2016-17.

Farmers typically have volatile profits, due to factors such as the weather, disease outbreaks or fluctuating global product prices. The change is expected to help farmers by allowing them to spread profits over consecutive years to offset the effects of volatility on profits.

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