Farmers who feared they would be faced with a big tax bill after having two single payments falling in the same financial year, now have the option to defer recognition of their 2008 SP until 31 December.
The changes outlined by the English and Scottish Institutes of Chartered Accountants apply to farmers with financial years ending between 16 May and 31 December and should keep taxable profits on a consistent basis, David Missen of Larking and Gowen accountants said. Those with financial years ending earlier in the year would continue to be unaffected, he said.
“Under the old guidance, a farmer with a year ending 30 September 2008 and an ‘old’ occupation period ending on 31 October, for example, would have recognised 21 months SP in the year to 30 September 2008. Under the new guidance, he can either recognise the income on 15 May, or defer recognition of the 2008 SP until 31 December.”