Income Tax (Trading and Other Income) Act 2005 section 112

Meaning of "animal", "herd", "production herd" etc.

Section 112 defines the key terms used throughout the herd basis chapter, including what counts as an animal, a herd, and a production herd, and sets out the rules on when immature animals form part of a herd.

• An "animal" means any animal or other living creature (including birds); a "herd" includes a flock or any other collection of animals; and a "production herd" is a herd of same-species animals kept wholly or mainly for the products obtainable from the living animal, such as offspring, milk, wool or eggs.
• Immature animals kept in a production herd are generally not treated as part of that herd for tax purposes, even if they are physically kept with the herd — for example, calves kept with cows.
• An exception applies where the nature of the land means replacement animals can only be bred and reared on that land — typically applying to "hefted" flocks of sheep on mountain, hill or heath land — in which case immature animals bred in the herd count as part of it, but only to the extent needed to prevent herd numbers from falling.
• The herd basis rules also apply to animals kept singly and to shares in animals, and an immature animal reaching maturity is treated as being added to the herd at that point.