Commentary

B5.152 Election for herd basis

Business tax
Business tax | Commentary

B5.152 Election for herd basis

Business tax | Commentary

B5.152 Election for herd basis

The herd basis is not automatic. A farmer must elect for it1 within a stipulated period after he begins to keep the herd in question. The election is not available to farmers who calculate their profit on the cash basis from 2013/14 (see B2.112)2.

For income tax purposes, to determine the period within which an election can be made it is necessary to determine:

  1.  

    (a)     the first period of account in which the farmer kept a production herd of the class to which the election relates;

  2.  

    (b)     the tax year in which that period of account ended.

The election must be made on or before the first anniversary of the filing date for that tax year, ie 31 January two years after the end of that tax year3.

Example

John has been an arable farmer for many years and makes up his accounts to 31 December. In March 2017 he acquires a dairy herd of cattle. This acquisition is in

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