Corporation Tax Act 2009 section 116

Sale of animals from herd

Section 116 sets out how to calculate the profit or loss when an individual animal is sold from a production herd and is not replaced or sold as part of a disposal of the whole or a substantial part of the herd.

• When an animal is sold from the herd without being replaced, any profit is taxable as a trading receipt and any loss is allowable as a deduction.
• The profit or loss is the difference between the sale proceeds and the "deductible amount" for that animal.
• The deductible amount depends on how the animal was obtained: if bred by the farmer it is the cost of breeding and rearing to maturity; if purchased, it is the purchase price plus any rearing costs; if acquired for no consideration, it is the market value at acquisition plus any rearing costs.
• This section does not apply where the animal is replaced in the herd by another animal, or where the sale forms part of a disposal of the whole or a substantial part of the herd taking place at once or within 12 months.