Currently farmers are able to average their profits over two consecutive years where the difference in profits over those two years is 30% or more. There is a marginal relief where the difference is between 25% and 30%. This relief is useful where the profits straddle different marginal income tax rates.
A consultation was announced in the March 2015 Budget proposing an extension of the averaging period to five years.
Finance Act 2016 will include provisions to bring into effect the extension of the averaging period to five years.
This change may offer additional flexibility to farmers who have fluctuating profits, although a number of years will need to remain open in order to make use of this relief.