Farm finance: Take advantage of new five-year averaging rules for farm tax
Historically, a three-year average was used but that was increased to five years from 2015 onwards.
The volatility of farming profits means this year and next consideration will be given by many to opting in or out of income averaging. It's a useful tool to plan ahead for the uncertain markets alongside choosing to prepare interim accounts, which was discussed here last week.
Averaging has the benefit of smoothing out farm profits, thereby offering some stability in relation to taxable profits and could be worthwhile depending on how profits are shaping up for 2021, 2022 and for the coming year.
