A cap introduced in the Budget to limit tax relief for trading losses will affect some farm businesses significantly, warn accountants.
The new measure restricts the ability of individuals to offset trading losses in one business against income and profits from other sources.
“From 6 April 2013, total tax reliefs on income will be capped at either 25% of annual income or £50,000, whichever is the greater,” said Richard Cartwright, a partner with accountant Saffery Champness.
“It won’t affect everybody but some people do bank on being able to offset their farming losses.”
Diversified farming businesses where the farming and diversification enterprises were run as separate businesses could be affected, as would those who had earnings outside the farming business against which farming losses could be offset.