The ordinary rules for computing trading profit apply to farming and market gardening1. Problems can arise in determining whether particular expenses are regarded as capital or revenue expenditure, and whether certain expenses are deductible in the computation. Whilst the deductibility of expenditure is decided on general principles (see Division B2.3), the commentary below may be helpful when considering certain farming expenses.
Farmhouse rents
Where a tenant farmer pays farmhouse rent in respect of the entire farm, it is important to distinguish between the proportion which relates to the farm land (which can properly be deducted as an expense wholly and exclusively incurred for the purposes of the farming trade2) and that which relates to the farmhouse (which is allowable only to the extent that it relates to business use). The proportion of rent that relates to the farmhouse depends on the facts of each case. HMRC do not generally accept that the part of the rent relating to the farmhouse is represented by the difference between value of land without a house and the value of land
To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to Tolley+™ Research or register for a free trial
Web page updated on 17 Mar 2025 17:36