Increased flexibility which allows farmers to average their profits over five years for tax purposes instead of two have been applauded by one of the region’s leading rural tax specialists.
Gary Priest, a tax expert who advises farmers and landowners across the West Midlands, said the changes would help farmers to cope with increasing volatility in their markets.
Farming was recognised in the recent Budget as one of the sectors that was contributing to a ‘truly national recovery’ as described by Chancellor, George Osborne.
At the present, self-employed farmers can average their profits for income tax over two years – but from April next year that will rise to five years. The plans are subject to consultation and could change altogether depending on who wins the keys to 10 Downing Street after the General Election in May.
But Mr Priest, an associate at law firm mfg Solicitors, said if it does go ahead the plan is going to give a great boost for self-employed farmers as well as assist them to invest more in their businesses, improving the industry and creating jobs.
He said: “Giving farmers more flexibility is an extremely positive move and could also in turn help rural communities and other rural business ventures.
“In essence the plans will give a farmer far more flexibility to control their tax liability and cash flow. Reducing a tax bill is always welcome but creating a sustainable business is not as simple as that.
“Farming is an industry affected by a great many differing factors and entire years can be vastly different to one another depending on global market affects, or even because of the weather.
“So it is essential to look at which year a taxable profit arises so that trading losses can be used or funds earmarked for equipment ahead of an impending tax bill. It’s a significant move by the government and should be widely welcomed.”
The policy followed a high profile campaign by the National Farmers Union (NFU) which represents 85,000 members in the farming industry.
Readers who want advice can contact Gary Priest on 0845 55 55 321, firstname.lastname@example.org or visit www.mfgsolicitors.com for more information.