It is not uncommon for farming profits to fluctuate year on year. Averaging your profits can therefore be beneficial.
The criteria to make a Farmers Averaging Relief claim is as follows:
- The difference in profits must be more than 25% of the higher profit band
- Applies only to profits from farming, including rearing of livestock and market gardening
- You must not be using the cash accounting basis
- A claim cannot be made in the year of commencing or ceasing as a partner in a partnership
- You can make the claim over a two or five year period
- The relief is not available for limited companies