What types of land-based concerns are taxed under section 12 of ITTOIA 2005?

Section 12 applies to mines, quarries (including gravel pits, sand pits and brickfields), ironworks, gasworks, salt springs or works, alum mines or works, waterworks, streams of water, canals, inland navigation, docks, drains or levels, rights of fishing, rights of markets and fairs, tolls, bridges, ferries, railways, other kinds of way, and any concern of a similar kind.

Are profits from mines and quarries under section 12 subject to Class 4 National Insurance contributions?

No. Although profits are calculated and charged to income tax as if the concern were a trade, the concern is not actually deemed to be a trade. This means Class 4 National Insurance contributions do not apply, and the taxpayer also cannot claim capital gains tax rollover relief under section 152 of the Taxation of Chargeable Gains Act 1992.

Can losses from land-based concerns under section 12 qualify for trade loss relief?

Yes. Where a concern within section 12 generates losses, those losses are treated as losses of a United Kingdom trade for the purposes of Part 4 of the Income Tax Act 2007. The taxpayer can set losses against general income for the year or carry them forward against future profits from the concern.

What happens when section 10 of ITTOIA 2005 also applies to the same land-based activity?

Section 10 takes priority over section 12. Where the commercial occupation of land (other than woodlands) already falls within section 10, section 12 does not apply. Section 10 can be more beneficial because it treats the activity itself as a trade, potentially giving access to capital gains tax rollover relief.

Income Tax (Trading and Other Income) Act 2005 section 12

Profits of mines, quarries and other concerns

Section 12 deals with how profits and losses from certain land-based concerns — such as mines, quarries, waterworks and similar operations — are taxed as if they were trading profits or losses, even where the activity does not technically constitute a trade.

Profits and losses from specified land-based concerns (mines, quarries, waterworks, canals, fishing rights, etc.) are calculated and taxed as if they were trade profits or losses
Profits are charged to income tax as if the concern were a UK trade, but this does not impose a tax charge on non-UK residents operating concerns outside the United Kingdom
Losses are eligible for trade loss relief under Part 4 of ITA 2007, as if the concern were a UK trade
The section does not apply where section 10 (commercial occupation of land other than woodlands) already covers the activity, as section 10 takes priority

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