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Benefits In Kind For Farming Spouses


Julie Butler - Expert Author

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21 August 2012

The structure of family farms varies greatly between farming operations. There are many farms where the husband and wife are in partnership and work as partners in the business, and there are other situations where one spouse is in charge of the main operation and the other spouse is simply paid a wage for the work that is undertaken for the farm.

With the prosperity that farming has recently been enjoying, in some farms there has been an increase in lifestyle purchases and benefits which include, for example, quality non-commercial four-wheel drive motor vehicles (ie not vans) being purchased by farming businesses. The “benefits” of these vehicles are being provided to farming proprietors and also to spouses employed in the business. Such vehicles can have a high value and therefore a high potential benefit in kind (BIK) if they are provided to an employee. The BIK burden can be reduced with commercial vehicles qualifying as vans. The most clear example of the problem is where a Discovery or Range Rover is being provided to a wife who is, say, being paid a salary of £5,000 to £10,000 and the benefit in kind pushes the salary above the £8,500 ceiling and results in a high taxable burden. This additional taxable benefit is often being picked up during a PAYE inspection or by PAYE checks. It is a clear example of how simple business decisions within the complexity of a farming operation should be considered in the round without the full understanding of the tax consequences of what is involved. Obviously if the wife is taken on as a partner, this question of the burden of the high taxable BIK can be replaced simply by private use. The bigger picture of inheritance tax and capital gains tax should be considered, if the spouse were to own part of the farmland for example. It would be much more sensible to follow the partnership route when there would be a “tax marriage between the land ownership and the trade”.

These problems are being brought to light during PAYE inspections where the adviser has missed the problem or has not been provided with the full information by the client and it is often a long time since a farmer has had a PAYE or a VAT inspection. This highlights another problem that can be overlooked – directors’ benefit in kind, eg non-commercial vehicles, farmhouses held in the limited company.  A thorough review of farming benefits in kind for both directors and spouses paid a wage and benefits should be considered.

About the Author

Supplied by Julie Butler F.C.A. Butler & Co, Bennett House, The Dean, Alresford, Hampshire, SO24 9BH.  Tel: 01962 735544.  Email;, Website;

Julie Butler F.C.A. is the author of Tax Planning for Farm and Land Diversification (Bloomsbury Professional), Equine Tax Planning ISBN: 0406966540, and Stanley: Taxation of Farmers and Landowners (LexisNexis).

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Article Published/Sorted/Amended on Scopulus 2012-10-25 09:10:19 in Tax Articles

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