The following Owner-Managed Businesses guidance note by Tolley in association with Julie Butler provides comprehensive and up to date tax information covering:
As a rule, farm animals are allocated to trading stock within the annual farm accounts. However, some such animals are kept primarily for the products they produce, or in breeding cases for their offspring, and are, to all intents and purposes, capital assets. UK tax law recognises this by giving the farmer the option of electing to use the herd basis.
Overview of key points:
See also Simon’s Taxes B5.150–B5.154 (subscription sensitive).
Where a herd basis election has been made, the production herd is governed by rules contained in ITTOIA 2005, Part 2, Chapter 8.
In summary, the main rules are as follows:
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