TMMF Ltd
Farminguk
29 August 2016 | Online since 2003
Less co2 Limited


15 April 2014 10:21:26 |Animal Health,Cattle,Finance,News

Farmers face substantial tax bills over TB slaughter


Beef and dairy farmers whose cattle were slaughtered due to TB could face substantial tax bills, according to agricultural accountants.

Last year, almost 33,000 cattle were compulsorily slaughtered, with some farmers losing a large proportion of their herd.
Aside from the emotional and financial stresses involved, losing large numbers of animals can also result in a steep hike in tax, said Andrew Vickery, head of rural services at Old Mill.

“The problem occurs when the compensation for those cattle is paid, as it could fall into a different financial year to the purchase of replacement animals,”.
“If animals are held in a producer’s accounts as trading stock rather than on the herd basis, the compensation can lead to an abnormal profit, potentially turning into to a large tax liability.”

Where more than 20% of a ‘production herd’ is slaughtered due to disease, farmers running their accounts on the herd basis only have to bring compensation receipts into the accounts when the corresponding replacement animals join the herd, said Vickery.
“This has considerable tax advantages over the alternative trading system.”

Fortunately for farmers who hold animals as trading stock, they can retrospectively change their accounts to the herd basis from the beginning of the year in which the compensation is due, where more than 20% of a herd is slaughtered.
“This is potentially very useful for those not already on the herd basis who might be affected.”

Producers who prefer not to change to the herd basis can make use of an extra statutory concession to spread profits from the year of slaughter over the next three tax years to help manage their tax liability, said Vickery.

There are many pros and cons about the different structure of farm accounts.
“One of the downsides of the herd basis is that if the compensation paid is less than the value of the animal, the producer cannot offset that loss against tax – which they would be able to under the trading basis.”

However, if profits are made when more than 20% of the herd is sold or slaughtered at any one time, the uplift in value is generally tax-free. “As a rule, most farmers would prefer to opt into the herd basis, but can only do so under certain circumstances, such as adding or losing a partner,”.
“If you are unlucky enough to lose a large proportion of your herd to TB, it could be an opportune time to make the switch to the herd basis, if that is a suitable option for your business.”

Download

0 Comment

loginuserlogo
Name

Please enter your name


Email

Please enter your email

Please enter valid email


Comment

Please enter your comment


Post Comment

Your comment has been submitted successfully. Please wait for admin approval.


Comments

No comments posted yet. Be the first to post a comment


Canada | 26 August 2016
Canadian beef exports to EU in limbo over E. coli dispute

If differences of opinion over food safety practices are not resolved, the big promises of a new European market for Canadian beef may be a pipe dream. The Comprehensive Economic and Trade Agreemen...


India | 26 August 2016
GM mustard clears hurdle in India but more remain

A government panel has cleared commercial use of what would be India's first genetically modified (GM) food crop, but politicians still have to give final approvals amid wide-spread public opposition....


USA | 26 August 2016
USDA buys $20 million in cheese from dairy farms

Moving to bolster dairy farmers who are struggling to cope with price declines, the Agriculture Department announced Tuesday it is spending $20 million - on 11 million pounds of cheese. A taxpayer ...


France | 26 August 2016
Lactalis talks with French milk producers end with no deal

A meeting between Europe's largest dairy group Lactalis and French milk producers requesting a rise in prices ended in a deadlock after 10 hours of negotiations, sources close to the talks said. ...


USA | 26 August 2016
California farmers turn to sewers for water

California's prolonged drought is forcing Central Valley farmers to scramble for water to irrigate crops. They have to be creative. One agency is even turning to a sewage plant to meet demand. Just...



Trending Now

Viewed
Discussed


Top stories you may have missed
FarmingUK
FarmingUK Logo

FarmingUK

A new survey has revealed that the vast majority of British consumers belie...


FarmingUK
FarmingUK Logo

FarmingUK

The British public are overwhelmingly in favour of keeping or strengthening...


FarmingUK
FarmingUK Logo

FarmingUK

The sustained recovery of pig prices since the spring has come at a time wh...


FarmingUK
FarmingUK Logo

FarmingUK

A World Trade Organisation (WTO) panel has declared the Russian import ban ...


FarmingUK
FarmingUK Logo

FarmingUK

A new study has linked oilseed rape crops grown from neonicotinoid-treated ...


FarmingUK
FarmingUK Logo

FarmingUK

Philip Hammond is to guarantee billions of pounds of UK government investme...


FarmingUK
FarmingUK Logo

FarmingUK

Access to the foreign labour market is 'critical', according the chief exec...


FarmingUK
FarmingUK Logo

FarmingUK

The Tenant Farmers Association has said the National Trust's vision for a p...


FarmingUK
FarmingUK Logo

FarmingUK

Ulster farmers will 'not lie down and wave the white flag' when Brexit nego...


FarmingUK
FarmingUK Logo

FarmingUK

The cost of rural crime to the UK economy costs £42.5 million a year, accor...


closeicon
Username
Password