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HMRC internal manual

Business Income Manual

Farming: land drainage expenditure

S33 Income Tax (Trading and Other Income) Act 2005, S53 Corporation Tax Act 2009

Land, which in the past was reasonably well drained, may subsequently have become wholly or partly waterlogged. This may be because the maintenance of efficient drainage was uneconomic. The restoration of drainage or re-draining may sometimes allow the land to again become available for cultivation. The net expenditure incurred in restoring the drainage to its effective state may be allowed as revenue expenditure in farm accounts. Credit must be given for any grants received for this work.

This excludes:

  • any substantial element of improvement - for example, the substitution of tile drainage for mole drainage, and
  • the capital element in cases in which the present owner is known to have acquired the land at a depressed price because of its swampy condition (see BIM46900 onwards).