Agricultural (farm) income

by **mungodaisy** on Sat Aug 27, 2011 6:43 pm

My wife and I own a farm (or smallholding) as a partnership and breed sheep. Our turnover is about £10000 and expenses nearer £15000, so we have a loss of about £5000. Thus we are not paying any tax on this business partnership. As we are not making use of all the land we are considering letting a neighbour use a few acres for an annual rental of about £500.
Can we treat this as additianal farm income, thus increasing turnover and simply reducing our loss? Or must we treat it separately as land rental in which case I think that it would be taxable?

For info, this is really just a hobby so we are not expecting to make a profit at any time in the future.

Thanks for any help.

by **maths** on Sun Aug 28, 2011 5:16 pm

For info, this is really just a hobby so we are not expecting to make a profit at any time in the future.

If you are referring to the farming of the small-holding, then any loss arising is not an allowable loss for tax purposes.

Any rents subject to income tax (less any costs which would seem limited, if any).

by **mungodaisy** on Mon Aug 29, 2011 10:50 am

Thanks, but I think that I have not made my question very clear.

At the moment we pay no tax on the farming business sine we make a loss of about £5000.

If we let a few acres to our neighbour at about £500pa, then can we include this as farm income in which case the loss will reduce to about £4500, but we will still have no tax to pay?
Or do we need to complete thr Property pages on the tax return which will show a profit of £500 and will be taxed?

by **maths** on Mon Aug 29, 2011 12:55 pm

If your activity is a hobby and you make a loss the taxman doesn't care; it is irrelevant.

Profits and losses of hobbies are not taxable or allowable.