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HMRC internal manual

Business Income Manual

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HM Revenue & Customs
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Cemeteries and crematoria: lump sums/graves maintenance: computing profit

What to do in practice

This page discusses the tax treatment of lump sums received for grave maintenance (covered in BIM52505) in more detail.

Treatment under generally accepted accounting practice (GAAP)

The usual treatment of lump sums received for grave maintenance under GAAP is:

  1. the lump sums received during the year should be brought into the computation, less the capitalised value of the corresponding liability for maintenance etc
  2. the actual expenses of maintenance etc of the graves should be allowed as a deduction
  3. all income derived from the investment of the lump sums should be taxed in accordance with the relevant rules. For unincorporated businesses, the tax treatment would depend on the facts (see BIM40805). For companies, the loan relationship rules would apply (see CFM30000)

Although the GAAP treatment above should be followed, we have no objection to the trader:

  1. excluding such lump sums from the trading receipts
  2. bringing into credit the whole of the income arising from the investment of the lump sums as if it were interest. This means that in the case of an unincorporated business, the tax treatment would depend on whether it is an integral part of the business operations to employ capital to produce such income, see BIM40805. In the case of a company the loan relationship rules would apply, see CFM30000
  3. deducting the actual annual expenses of maintenance etc of the graves as a deduction