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HMRC internal manual

Business Income Manual

Farming: stock valuation: farm animals treated as trading stock

S30 Income Tax (Trading and Other Income) Act 2005, S50 Corporation Tax Act 2009

The animals kept by a farmer for the purposes of his or her farming are to be treated as trading stock. Although most farm animals would probably fall to be so treated under normal commercial principles, the statute puts the matter beyond doubt. The statutory provision does not however cover working animals (see BIM55440 regarding working horses) or animals kept wholly or mainly for public exhibition or for racing or other competitive purposes. The treatment of such animals should therefore follow normal principles.

As an exception to the general rule, a farmer may elect for animals to be dealt with on the herd basis, see BIM55500onwards.

Guidance on the valuation of thoroughbred horses is provided at BIM55701 - BIM55705. The deemed cost method is not appropriate to the valuation of thoroughbred horses.