BIM55051 - Farming in tax law: definition of farming

Unlike most trades, farming is statutorily defined for tax purposes. ICTA88/S832 (1) states that:

`farm land' means land in the United Kingdom wholly or mainly occupied for the purposes of husbandry, but excluding any dwelling or domestic offices, and excluding any market garden land, and `farming' shall be construed accordingly.

Thus, `farming' for tax purposes is the occupation of land in the United Kingdom wholly or mainly for the purposes of husbandry.

For Income Tax purposes the definition was rewritten into ITTOIA/S876 effective from 6 April 2005 until 5th April 2007. After this period the definition is found in ITA 2007/S996(1) and in both places reads as follows:

‘In this Act “farming” means the occupation of land wholly or mainly for the purposes of husbandry, but does not include market gardening (see subsection 5)”

Three features of this definition are considered hereunder:

• occupation of land ( BIM55055)
• in the United Kingdom ( BIM55095)
• wholly or mainly for the purposes of husbandry ( BIM55100).

The definition is of significance because a number of statutory provisions apply, or refer, specifically to farming. These include:

• ICTA88/S53 or ITTOIA/S9 - All farming to be treated as a trade (see BIM55110), and all farming carried on by a particular person (or partnership or body of persons) to be treated as a single trade (see BIM55115).
• ITTOIA/S221 - Averaging of profits (see BIM73100 onwards).
• ICTA88/S97 and ICTA88/SCH5 or ITTOIA/chapter 8 - Herd Basis (see BIM55500 onwards) (although not restricted to farming).
• ICTA88/S397 or ITA 2007/S67-70 - Restriction of loss relief where losses incurred in the five previous years (see BIM75600 onwards).