Average tax bill is easier to pay
Average tax bill is easier to pay
FARMERS can cut their tax billif they make more use of the averaging provision, says Denise Ranger of accountants MorisonStoneham.
The downturn in profits and the new self-assessment rules mean farmers could face a 40% tax charge for the boom 1996/97 year, then no charge in the next if losses were made.
But it may be possible to lower the overall bill if the charge for both periods is based on the lower tax rate.
In a partnership which made £80,000 in 1996/1997 then £20,000 in the next period, for example, the saving would be £5000 if the figures were treated as a £50,000 averaged profit in each period.
Cash flow benefits can also result, adds Ms Ranger. If farmers get their accounts done quickly after the end oftheir financial year, payment of tax otherwise payable on account for the later year can be postponed.