Tax relief · England, Wales, Scotland, Northern Ireland
Farmers' averaging of profits
Sole-trader and partnership farmers can average taxable profits over 2 or 5 years, which smooths out good and bad years and can cut the tax bill.
- From
- HMRC
- How much
- Not a payment; it can lower tax by spreading profits.
- Who can apply
- Sole traders and partners in a farming or market gardening business that use the accruals basis (not the cash basis), where profits swing by more than 25%.
What you’ll need
- Profit figures for the years being averaged
- Accounts drawn up on the accruals basis
How to apply
- Check the rules in helpsheet HS224
- Claim in box 72 of the Self-employment (full) pages, or box 11 of the Partnership pages
- Or amend a past return while the deadline is open
Not available if you use the cash basis, or for companies. Businesses that started recently can't use 5-year averaging.
Similar schemes
- Growth Guarantee Scheme (government-backed business lending) OpenBritish Business Bank, through accredited lendersThe government guarantees part of a loan, overdraft, asset finance or invoice finance from an accredited lender, which can help a farm business borrow when it might not otherwise get finance.
- Scottish Broadband Voucher Scheme OpenScottish Government (R100 programme) · Closes 20 November 2026A voucher towards getting a faster broadband connection installed at a home or business with slow broadband and no faster connection planned.
- Sustainable Agriculture Loan Scheme OpenDevelopment Bank of Wales, for the Welsh GovernmentLow-interest loans for on-farm renewable energy, energy efficiency and storage, slurry and nutrient management, and farm infrastructure and equipment.
- Workplace Charging Scheme (EV chargepoints) OpenOffice for Zero Emission Vehicles (OZEV), run by DVLA · Closes 31 March 2027A voucher towards buying and fitting electric vehicle chargepoints for staff or farm fleet vehicles. You get a voucher code and give it to an authorised installer, who claims the money.
- 40% first-year allowance Open all yearHMRCDeduct 40% of the cost of new main-rate plant and machinery from profits in the first year, with the rest claimed over later years.
- Annual Investment Allowance (AIA) Open all yearHMRCDeduct the full cost of most machinery and equipment (tractors, kit, many fixtures) from your profits in the year you buy it, so you pay less tax.
Checked against the official pages on 29 October 2026. Sources: 1. Always read the official page before you apply.