BIM55140 | Farming: De-linked Payments: Tax Treatment/Basic Charge

S5, S9, S25 and S687 Income Tax (Trading and Other Income) Act 2005, S996 Income Tax Act 2007,
S35, S36, S46 and S979 Corporation Tax Act 2009, S1125 Corporation Tax Act 2010

The delinked Direct Payments are in place of the BPS payments and linked to the fact the recipient is/was a farmer
and would therefore be subject to the income tax rules, (depending on each recipient’s circumstances), either:

i) as trading receipts of an ongoing business or

ii) post cessation receipt
receipts arising from the carrying on of a trade which are received after a person permanently
ceases to carry on a trade and arises from the carrying on of the trade before the cessation.

iii) or miscellaneous income

In summary, the de-linked payments (same as BP scheme) may be taxable under:

i) section 9 ITTOIA 2005 (farming),

ii) section 10 ITTOIA 2005 (non-farming trade), or

iii) Chapter 8 of Part 5 of ITTOIA 2005 as miscellaneous income.