Farm groups NFU and the Country Land & Business Association (CLA) have called for HMRC to have flexibility on the implementation of the new five year period for tax averaging.
In his budget earlier this year, the Chancellor made the concession after it was argued that help was needed for British farmers to better cope with the volatility of the current market.
A recent consultation by the government into the introduction of the plan from April 2016, outlined two options. The first would involve the extending of the existing two year scheme to a rolling five year, but with a volatility test in place to help assess eligibility. The second would be an optional scheme where farmers could chose to opt in for a fixed five year period irrevocably.
The CLA has argued that volatility could be experienced over much shorter periods that five years, so farmers should be able to choose whether they would want to average their profits over a shorter time scale.
While NFU admitted that the five year period would be beneficial ‘most of the time’, they added that the current two year period should be retained ‘as an option’, as well as introducing the extended five year averaging period.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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