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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Farming: Single Payment Scheme: leasing

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

An explanation of the terms used in the Single Payment Scheme is at BIM55128.

Where PE is leased by one person to another the EU regulations specify that it must be accompanied by an equivalent area of qualifying agricultural land with both assets being let from the same date and for the same period. The correct analysis points to the income for the land being chargeable as income from a property business and the income for the PE as miscellaneous income. Where agreements do not specify the rental amounts appropriate to each it will be necessary to apply an apportionment based on market values.

In situations where PEs are transferred to landlords for nil consideration under the terms of a lease then, depending on the circumstances of the handover, there may be a lease premium charge arising under the relevant statutory provisions (see PIM1200 onwards).