Sara Bonavia considers the income tax aspects of loss relief for farmers
As well as being governed by the normal loss relief rules for trading businesses, additional rules apply in respect of farming trades. Providing a farmer’s trade meets the normal commerciality tests, these additional rules can offer benefits, such as the ability to average their profits over two or five years (thus giving relief against significant annual fluctuations). The rules can also be restrictive, such as where the five year rule denies sideways loss relief if losses have arisen in the five consecutive previous tax years. This article considers the income tax aspects of loss relief for farmers.