Helping farmers to plan and invest for the future
Originally published by UK Liberal Democrats
New measures announced in the Budget will make it easier for farmers to plan and invest for the future.
We are increasing the period over which self-employed farmers can average their profits for income tax purposes from 2 years to 5 years, providing them with extra protection from volatility.
Under the current system farmers can add together their profits for two years. Each income tax will be due on the average of those profits.
For example a farmer making profits of £15,000 in year one and £45,000 in year two could make an averaging claim and be taxable on £30,000 in each of year one and year two.
By averaging the amount, farmers will be able to spread volatile profits over consecutive good and bad years.
Liberal Democrat MP Roger Williams said:
"Extending the period over which self-employed farmers can average their profits has been something I have been lobbying the UK Government to take action on for some time now.
"I'm therefore delighted with this announcement and it's a clear win the for the Liberal Democrats. Farmers typically have volatile profits, often due to uncontrollable factors such as the weather, disease outbreaks or fluctuating product prices.
"This volatility makes it difficult for farmers to plan and invest for the future. That is why the Liberal Democrats have been fighting for this change."