§ Sir Geoffrey Johnson SmithTo ask the Minister of Agriculture, Fisheries and Food if he will discuss with the Inland Revenue the case for reviewing the rules that a farm must make a profit once in seven years if its losses are to be tax-allowable against profits from other sources. [87263]
§ Mr. RookerPrior to the last Budget the agriculture industry submitted to the Minister and the Chancellor of the Exchequer various detailed tax proposals including the recommendation that the rules restricting the set-off of farming losses against other income should be modified. These were considered.
At present losses cannot be set off against profits from other sources if a farming business has made losses for five years. The "five year tax rule" was introduced to protect the Exchequer from subsidising the cost of continued loss-making farming activities where farming is taken up by people who are not dependent upon it for a livelihood. However tax relief is not lost as losses can be carried forward against future profits from the same source. Thus farming losses can be offset against future fanning profits.