BIM55134 - Farming: Single Payment Scheme: Leasing

Where PE is leased by one person to another the EU regulations specify that it must be accompanied by an equivalent area of qualifying agricultural land with both assets being let from the same date and for the same period. The correct analysis points to the income for the land being chargeable under Schedule A or Part 3 of ITTOIA and the income for the PE under schedule D case VI or [Chapter 8 of Part 5 of ITTOIA]. Where agreements do not specify the rental amounts appropriate to each it will be necessary to apply an apportionment based on market values.

In situations where PEs are transferred to landlords for nil consideration under the terms of a lease then, depending on the circumstances of the handover, there may be a premium charge arising under s.34(5) ICTA 1988 or Chapter 4 of Part 3 of ITTOIA.