Income Tax (Trading and Other Income) Act 2005 section 115

Addition of animals to herd

Section 115 deals with how to calculate trading profits when a new animal is added to a herd, as distinct from replacing an existing animal in the herd.

• This section applies when an animal is added to the herd and does not replace another animal — replacements are dealt with separately
• No tax deduction is allowed for the cost of the additional animal
• If the animal was part of the farmer's trading stock immediately before joining the herd, a "balancing amount" must be brought into account as a trading receipt
• The balancing amount recovers costs already allowed as trading expenses — for a home-bred animal it is the breeding and rearing costs, and for a purchased animal it is the acquisition cost plus any rearing costs to maturity