A farming client who is currently making loss from his farming activities has now started to let out barns in the yard behind the farm house. I am unsure whether the income arising should be treated as part of his farming income, or should be declared separately as rental income.
The rental income will be relatively modest, perhaps £5,000 - £6,000 a year and if treated as part of the trading income it is likely that the income will be covered by the loss made by the farm.
The farming losses are no longer able to be offset against total income so this does seem a rather artificial way of avoiding paying tax on the rental income which would be the case if the rents were declared separately.
It does appear however that the BIM may allow the income to be treated as part of the trading income, albeit that the "temporarily surplus to requirements" conditions may be somewhat questionable.
Thanks for any thoughts.