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Assessed as a trade

The profits from farming and market gardening are within the scope of income or corporation tax. Specifically both activities are treated as the carrying on of a trade¹; this is the case irrespective of whether there is any commercial motivation. An example of this is breeding horses as a hobby; HMRC usually treat this as farming and therefore carrying on a trade, even though the badges of trade may on balance point to no trade existing². This does not mean, however, that if commercial motivation is missing that the activity will qualify for loss relief, see B5.175.

The ordinary rules for computing trade profits therefore apply to farming and market gardening. For commentary on the treatment of various farming receipts and expenses, see B5.106 and B5.107 respectively. For commentary on stock valuation in farming cases and the treatment of farm animals, see B5.135.

Farming activities assessed as one trade

All farming carried on in the UK by any person or partnership or body of persons or company