Income Tax (Trading and Other Income) Act 2005 section 124

Herd basis elections

Section 124 sets out the rules for making a herd basis election, including timing requirements, scope, and the effect of partnership changes.

• Each election must specify a single class of production herd; separate elections are needed for different classes, and once made an election is irrevocable
• The election must generally be made by the first anniversary of the normal self-assessment filing date for the tax year in which the farmer's first relevant accounting period ends, with an extended deadline of the second anniversary available to individual farmers (not partnerships) who started the trade in that same tax year
• The election covers all production herds of the specified class — including any the farmer kept before the election or acquires afterwards — and applies for every accounting period in which the farmer carries on the trade and keeps that class of herd
• Where the farming trade is carried on by a partnership and there is a change in partners, the old firm's election ceases and the new firm must make a fresh election if it wishes to use the herd basis