Budget 2008

Agricultural Related Income Tax Matters - Budget 2008 - GT

Agricultural Related Income Tax Matters

Averaging farm profits

  • Only applicable for partnerships an sole traders.
  • Each partner is treated individually.
  • Averaging is available where the adjusted profits after capital allowances for 2 consecutive years differ by more than 25%.
  • Losses count as nil profit for this purpose.

Herd basis

  • Election is available for all types of production herds.
  • Once made the election is irrevocable.
  • A new election is required in certain circumstances (eg change of partner).
  • Net replacement cost is allowable against profit.
  • Profits on disposal of more than 20%of herd are tax free if not replaced within 5 years.
  • Can also apply to shares in production animals.

Hobby farming

  • Loss relief will normally be is allowed where:
    • the activity is undertaken on a non-commercial basis; or
    • there are losses before capital allowances for 5 consecutiveyears.

One trade

  • Farming, wherever it is carried on in the UK, is deemed to be one trade regardless of how many farms are operated by the same
    individual, trust or company.

Single payment

  • Is taxed as income.
  • Recognition for tax purposes depends on the choice of 10 month period and will be assessed on a calendar year basis.
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