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HMRC internal manual

Capital Allowances Manual

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HM Revenue & Customs
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ABA: definitions

Agricultural buildings allowance was phased out by FA2008.

A person gets

  • 75% of the allowance for the financial year beginning 1 April 2008/tax year 2008/09
  • 50% of the allowance for the financial year beginning 1 April 2009/tax year 2009/10
  • 25% of the allowance for the financial year beginning 1 April 2010/tax year 2010/11

There is no ABA for the financial year beginning 1 April 2011/tax year 2011/12 onwards.

CAA01/S361 - S362

Agricultural land is land in the United Kingdom occupied wholly or mainly for the purposes of husbandry. For ABA purposes land outside the United Kingdom is not agricultural land. This means that a farm building overseas cannot be an agricultural building for ABA purposes CA40200.

Treat land as occupied for the purposes of husbandry if the trade or business carried on by the person occupying the land depends to a material extent on the fruits (natural or commercial) of that land. You are not likely to have any problems in deciding whether land is occupied for the purposes of husbandry but if you want more guidance on this you should find the cases of Lean & Dickson v Ball 10TC341 and Jones v Nuttall 10TC346 useful.

For ABA purposes husbandry also includes:

  • The intensive rearing of livestock or fish on a commercial basis for the production of food for human consumption. This brings in activities like fish farming and rearing animals in buildings.
  • The cultivation of short rotation coppice. Short rotation coppice is the planting of trees at a high density with a view to harvesting them within 10 years - FA95/S154 (3).

An agricultural building is a farm building, a farmhouse, a cottage or other works.

The ABA legislation applies to part of an agricultural building in the same way that it applies to a whole building.

A farm building is a structure like a barn, a cowshed, a chicken shack, a milking parlour or a stable.

A building used by a farmer as a retail shop is an agricultural building to the extent that it sells farm produce. It is not an agricultural building to the extent that it sells bought in produce or products.

Example David runs a fruit farm. He builds a shop on the farm where he sells the fruit that he produces and vegetables which he buys in. As 40% of the produce which David sells is grown on his farm and the other 60% is bought in then 40% of the costs of constructing the shop qualify for ABA.

A farmhouse is the building that a farm is run from. When you decide whether a building is a farmhouse you should look at the duties of the occupant rather than who the occupant is. For instance, if the owner of a farm has a full time job in the city and leaves the running of the farm to a manager it is the house that the manager lives in and not the house that the owner lives in which is the farmhouse. The case of Lindsay v C.I.R. 35TC289 supports this. In that case the farmer lived abroad. The head shepherd occupied the only house on the farm. That house was held by the Courts to be the farmhouse because the farm operations were conducted from it.

A farm may have more than one farmhouse. If there are two houses on the farm and the farm is run from both of them they will both be farmhouses. For example, a farm may be owned by 2 brothers who run it in partnership. Both of the houses that the brothers occupy are farmhouses.

The legislation does not define cottage and so you should give cottage its ordinary meaning. The dictionary defines a cottage as a small dwelling house and that is the definition you should use. If a building is so large or costly that it cannot reasonably be regarded as a cottage it will not be a cottage for ABA purposes. A building occupied by the owner of a farm will be a cottage rather than a farmhouse if it satisfies the definition of cottage and the farm is run from some other building. If, however, the owner of the farm lives in a mansion and the farm is run from some other building the mansion is not an agricultural building because it is not a cottage or a farmhouse and so no ABA is due.

Cottages occupied by retired farm workers and buildings constructed to provide welfare facilities for farm employees are agricultural buildings.

Other works are not defined but they include:

  • drainage and sewage works
  • water and electricity supply installations
  • walls
  • planting shelter belts of trees
  • silos
  • farm roads
  • reclamation of former agricultural land
  • removal of trees or hedges that are dead, diseased or obstruct agricultural operations.