Income Tax (Trading and Other Income) Act 2005 section 114

Initial cost of herd and value of herd

Section 114 sets out how the initial cost and the ongoing value of a production herd are treated when calculating trading profits.

• No deduction is allowed for the initial cost of acquiring the herd when calculating trading profits.
• The value of the herd itself is not brought into account in the profit calculation.
• The herd is treated as a fixed, capital asset rather than as trading stock.
• These rules apply where a herd basis election is in effect for the trade.