When are two production herds of the same class under ITTOIA 2005 section 113?

Two production herds are of the same class only when both conditions are met: the animals must be of the same species, and the herds must be kept to produce the same type of product for sale. Different species or different products means the herds are not the same class, even if one condition is satisfied.

What does sale mean under the herd basis rules in United Kingdom tax law?

Under section 113, sale has an extended meaning that includes the death or destruction of an animal, not just a conventional transaction. Sale proceeds similarly include insurance payments received because the animal died or was destroyed, compensation money, and any proceeds from selling the carcass or parts of it.

When is a female animal considered mature for herd basis purposes?

For laying birds, maturity is reached when they first lay. For all other female animals, maturity is reached when they produce their first young. This distinction is important because it determines when an animal can properly be regarded as part of a production herd under the herd basis rules.

What constitutes a substantial part of a herd under ITTOIA 2005 section 113?

Twenty percent or more of a herd is always treated as a substantial part. However, a percentage below 20% may also qualify as substantial depending on the particular circumstances of the case. The 20% figure therefore provides a clear automatic threshold, while lower percentages require a factual judgement.

Income Tax (Trading and Other Income) Act 2005 section 113

Other interpretative provisions

Section 113 defines key terms and thresholds used throughout the herd basis rules, including what makes herds the same class, what counts as a sale, what constitutes sale proceeds, when female animals are considered mature, and what amounts to a substantial part of a herd.

Two production herds are only of the same class if the animals are of the same species and the herds are kept to produce the same type of product for sale
References to the sale of an animal include its death or destruction, and sale proceeds include insurance payments, compensation, and proceeds from the sale of the carcass
Female animals are considered mature when laying birds first lay or, in all other cases, when they produce their first young
20% or more of a herd is always a substantial part, but a lesser percentage may also qualify as substantial depending on the circumstances

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