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HMRC internal manual

Business Income Manual

From
HM Revenue & Customs
Updated
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Farming: expenses of farmhouse

S34 Income Tax (Trading and Other Income) Act 2005, S54 Corporation Tax Act 2009

A farmhouse normally fulfils a dual role being primarily the private residence of the farmer and his or her family and secondarily the centre of business operations on the farm. The farmer’s occupation of the farmhouse partly for business purposes means that the wholly and exclusively provisions apply to expenditure incurred in running the farmhouse. Only the proportion of the expenses such as heating and lighting, repairs, maintenance and insurance and, in the case of a tenant farmer, rent (see BIM55255), which is attributable to the business use of a farmhouse should be allowed as a deduction in computing farming profits.

You may see cases where one-third of the farmhouse expenses is claimed as if this were a standard allowable proportion. There is no statutory authority for this fraction and the extent of any business use will always be a question of fact and degree in any particular case.

From April 2013, farmers may, if they wish, choose to use the simplified expenses rules to calculate some of their allowable farmhouse expenses using a flat rate (see BIM75010).