Income Tax (Trading and Other Income) Act 2005 section 118

Sale of animals from herd

Section 118 sets out how to calculate trade profits or losses when an animal is sold from a herd and is not replaced, and does not form part of a sale of the whole or a substantial part of the herd.

• When an animal is sold from the herd without being replaced, any profit is treated as a trading receipt and any loss is allowed as a deduction
• The profit or loss is the difference between the sale proceeds and the "deductible amount" for the animal
• The deductible amount depends on how the animal was acquired: bred by the farmer, purchased, or acquired without payment
• This section does not apply where the animal is replaced in the herd, or where the sale forms part of a disposal of the whole or a substantial part of the herd within 12 months