The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
Farming or market gardening conducted in the UK is treated as the carrying on of atrade for tax purposes. As with other trades, whether or not aperson is carrying on atrade is aquestion of fact, but the word ‘trade’ includes the idea of exchanging goods or services for areward. The courts have indicated what might constitute trading in alarge number of cases ― the badges of trade, see the Badges of trade guidance note.
‘Farming’ means the occupation of land wholly or mainly for the purposes of husbandry but does not include market gardening. Market gardening is defined as ‘the occupation of land as agarden or nursery for the purpose of growing produce for sale’. To be afarmer aperson must satisfy two tests: the person must be in occupation of the land and the purpose of the occupation must be mainly for husbandry. The actual use of the land will normally be indicative of the purpose of occupation, but is not necessarily conclusive. Nor need the occupation be exclusive of others (share farming is an example where two persons may occupy land and each be farmers).
‘Husbandry’ is specifically said to include hop growing and the breeding, rearing and grazing of horses in connection with those activities. If the breeding of horses does not involve land, ie the mares are ‘boarded out’, then this does not count as farming for tax purposes.
Farming and market gardening, and the intensive rearing of livestock or fish on acommercial basis for the purpose of food consumption count as aqualifying trade, profession or vocation for the purposes of making an averaging claim. See the Averaging of profit guidance note.
The cultivation of ‘short rotation coppice’ is specifically described as husbandry, and thus constitutes farming. Short rotation coppice means aperennial crop of tree species (normally willow or poplar) ‘planted at high density, the
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