½ΫΧΣΚΣΖ΅

Farming ― restriction of losses for hobby farming

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance

Farming ― restriction of losses for hobby farming

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance
imgtext

This guidance note sets out the specific tax rules which determine whether a farm enterprise is treated as a commercial business or a hobby activity. One rule looks at the commercial basis of the farm and the other reviews situations where the farming activity has incurred losses for several successive years. The impact of being treated as a hobby farm is to restrict the use of losses. They prevent farming trade losses from being relieved against other income (or in some cases capital gains) of the same, or previous tax year, commonly referred to as sideways loss relief. The rules apply for both unincorporated businesses and companies.

The legislation is set out in ITA 2007, ss 66–70 and CTA 2010, ss 44, 48–49 and HMRC guidance is at BIM85615, CTM04710 and CTM04600.

Further details can be found in Simon’s Taxes B5.175 and Stanley: Taxation of Farmers and Landowners, 2.93.

General commentary on losses can be found in the following guidance notes:

  1. β€’

    Sole trader losses ― established trades

  2. β€’

    Sole trader loss relief

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+β„’
Powered by

Popular Articles

Reverse charge ― buying in services from outside the UK

Reverse charge ― buying in services from outside the UKThis guidance note covers the reverse charge that applies to services that have been bought in from outside the UK. For an overview of VAT and international services more broadly, see the International services ― overview guidance note. For

15 Dec 2020 14:02 | Produced by Tolley Read more Read more

Double tax relief

Double tax reliefWhen income arises in a foreign country to a UK resident company and that income is taxable in that foreign country, the UK may give the company relief for the foreign tax by crediting the foreign tax against the UK tax charged on that income. This might include withholding tax on

14 Jul 2020 11:31 | Produced by Tolley Read more Read more

Subsistence expenses

Subsistence expensesIntroductionSubsistence is the amount incurred as a consequence of business travel. Typically it relates to accommodation and meal costs incurred. These amounts are allowed because they are associated with the necessary travel which is not to a permanent workplace. See the Travel

14 Jul 2020 13:43 | Produced by Tolley in association with Philip Rutherford Read more Read more