UK farmers will now be allowed to average their income for tax purposes over five years, Osborne has announced in his latest budget.
In his Budget Speech the Chancellor said: “The fall in food prices is good for families; but it reminds us of the challenge our farmers face from volatile markets.”
“The National Farmers Union has long argued they should be allowed to average their incomes for tax purposes over five years; I agree and in this budget we will make that change.”
Up until now, farmers have only been able to average their profits over two years, resulting in large tax bills.
The tax averaging was a key issue in the NFU’s election manifesto for 2015 and follows on from the lobbying of government by its members.
NFU President Meurig Raymond said: “We are very pleased that Mr Osborne said that he had listened to the arguments by the NFU. As he mentioned in his speech, farmers are increasingly facing a volatile marketplace and this will enable them to manage the impacts of this.
“News that the annual investment allowance will be addressed in his Autumn Statement is also welcome. As [Mr Osborne] mentions, £25,000 is not an acceptable level which would encourage on-farm investment and we will await further announcements with interest.”
The tax change will come into place from April 2016.
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