§ Mr. Malcolm BruceTo ask the Chancellor of the Exchequer if he will estimate the cost to public funds of allowing a one-off facility for UK farmers to average their profits for income tax purposes over the last five years; and if he will make a statement. [57947]
§ Dawn PrimaroloCurrently farmers whose profits fluctuate by more than 25 per cent. can average their farming profits of two consecutive years and attribute half the total to each year. The resulting average profits can themselves be subject to averaging with later years.
616WScottish departments, by broad function and by spending department, for 1995–96 and 1996–97.
Together with the various provisions allowing any trading losses to be set against the profits of earlier or later years, this already gives farmers scope to smooth their profits over several years. The additional cost of allowing a one-off averaging over the last five years is difficult to estimate.
It would be extremely complicated for farmers to prepare, and the Inland Revenue to administer, five year claims, and it would not be possible to focus such a relief on particular sectors of farming.
The Government are very aware of the difficulties which farmers are facing as a result of the sharp decline in farm incomes. This is why the Minister of Agriculture, Fisheries and Food is in close touch with leaders of the farming industry to discuss what can be done to help the industry through this difficult time.