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HMRC internal manual

Business Income Manual

Cemeteries and crematoria: sale of niches

S172ZA-S172ZB Income Tax (Trading and Other Income) 2005, S149A-S149B Corporation Tax Act 2009

Niches are storage spaces for cremated remains. These tend to be walls with rectangular inserts for the remains and often a small plaque is affixed to the front of each niche as part of the price.

In computing the trading profits of crematoria, the tax treatment of receipts and expenses in connection with the provision of niches is as follows:

  1. treat receipts from the sale of niches as trading receipts
  2. allow a sum equal to two-thirds of the cost of niches sold as a trading expense.
  3. treat the cost of a niche as composed of:

i. specific cost, that is the cost of its own special formation, such as marble lining and tablet,

ii. the associated building costs (see below).

As a deduction is only available for two thirds of the specific costs rather than the whole of the specific costs, this provision is different to the deductions for memorials and inscriptions (see BIM52525).

Associated building costs

You should take the associated building costs into account only where the building(s) is wholly or mainly used for the purpose of providing niches. If the building is not wholly or mainly so used, the trader will be able to obtain a deduction for two thirds of the specific cost alone.

The associated building costs are the result of the following formula:

Costs of the building × Area occupied by the niche divided by Area of the building as a whole

For the definition of ‘costs of the building’, see BIM52530.

If the above fraction cannot be reasonably calculated on an area basis, it can be determined on a just and reasonable basis.

For example, if the cremation authority allocates the aggregate cost of the building to the niches on some systematic basis other than by area, you may accept that basis in arriving at the general cost. As a rule, cremation authorities can supply information as to the actual specific cost without difficulty.