BIM55132 | Farming: Basic Payment Scheme: Leasing / Farming Stock Valuation

Leasing

Parts 3 and 5 Income Tax (Trading and Other Income) Act 2005, Parts 4 and 10 Corporation Tax Act 2009

Where PE (payment entitlements) is leased by one person to another the EU regulations no longer specify that it must be accompanied by an equivalent area of land. Any income received in respect of the leased PE is chargeable to income tax as miscellaneous income under Chapter 8 of Part 5 of ITTOIA 2005.

Where PE is leased with land, the correct analysis points to the income for the land being chargeable under Part 3 of ITTOIA 2005 and the income for the PE being chargeable as miscellaneous income under Chapter 8 of Part 5 of ITTOIA 2005. Where the agreement does not specify the rental amounts appropriate to each, it will be necessary to apply an apportionment based on market values.

In situations where PEs created by a tenant are transferred to a landlord 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 the relevant statutory provisions (see PIM1200 onwards).

Farming Stock Valuation

The BP, with the exceptions of the Scottish Suckler Beef Support Scheme (SSBSS) and Scottish Upland Sheep Support Scheme (SUSSS) is not linked to any particular crop, product or expense and should not be taken into account in any calculation of the cost of stock. The SSBSS and SUSSS element should be accounted for in accordance with BIM55430.