The Budget provided a boost for self employed farmers who will be able to average their taxable profits over 5 years compared to the current 2 years. This is to take into account variations in weather and market volatility. This measure with become effective in April 2016.
We have a number of farming clients and we only opt for farmers averaging if it is produces a tax saving and cashflow advantage for the farmer. This proposal gives us a longer time period to derive an advantage for our farming clients.
The annual investment allowance is to be reviewed. This is a tax allowance for businesses investing in equipment and machinery. The current tax allowance is 100% relief on expenditure up to £500,000 and this was due to be reduced to £25,000 on 1 January 2016. The Chancellor announced that the £25,000 allowance is not an acceptable figure and that a more generous figure will apply. No amount has yet been announced and it is likely that this will be addressed after the forthcoming Election.
This is welcome news that the £25,000 allowance is to be reconsidered. This will encourage farmers to continue investing in equipment and machinery. When the new figure is announced it may be necessary to pro-rata the allowance to the farmers accounting period and it then becomes important to get the timing right for purchasing farming machinery and equipment in order to secure the 100% tax allowance.
If you would like to discuss this in further details please contact Brian King on 024 7622 1046 or e-mail [email protected]