Corporation Tax Act 2009 section 114

Replacement of animals in herd

Section 114 sets out the tax treatment when an animal in a herd is replaced by another animal, covering how sale proceeds and replacement costs are brought into the profit calculation.

• When an animal leaves the herd and is replaced, any sale proceeds from the old animal are treated as a trading receipt
• The cost of the replacement animal is allowed as a deduction against trading profits
• If the replacement animal is of better quality than the original, the deduction is capped at the cost of replacing with an animal of the same quality
• No double deduction is permitted where the cost of acquiring or rearing the replacement animal has already been allowed as a trading expense