Derky,
My understanding from page six of the Single Payment Scheme Handout is that if your margins are in a field which is not set-aside then you should record them as the same land use code as the rest of the parcel eg OT1 for wheat and barley.
If however your margins are in a field that is set-aside then you do have to split the field and record the margins separately on your field data sheet. This is because ELS options are not allowed to be located on set-aside land (apart from the options highlighted in page 89 of the ELS handbook). The margins will have the land use code TG3 on the field data sheet and you will also need to include a sketch map with your application.
Rachel Everitt