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HMRC internal manual

Business Income Manual

HM Revenue & Customs
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Farming: herd basis: what animals are covered

S112 Income Tax (Trading and Other Income) Act 2005, S110 Corporation Tax Act 2009

A herd basis election applies to all production herds (see below) of a particular class (see BIM55590) kept by the person making the election.


`Production herd’ means a collection of animals, or other living creatures, of the same species (irrespective of breed) kept by a farmer or trader wholly or mainly for the products which they produce for him to sell, being products obtainable from the living animal. The definition includes:

  • animals, or other living creatures, kept for the breeding and sale of their offspring (including thoroughbred horses kept for breeding purposes, where the progeny is wholly or mainly for sale),
  • animals, or other living creatures, kept for the production and for the sale of such products as milk, wool, eggs or honey.

The legislation also applies, with the necessary adaptations, to:

  • animals kept singly rather than in herds,
  • shares in animals (see BIM55635).


The following animals are excluded from the herd basis, either because they fall outside the general definition of a `production herd’, or by specific exclusion:

  • animals which are kept primarily for fattening or slaughter
  • animals added temporarily to a herd and then sold. (The question whether an addition is temporary or not will depend on the particular circumstances. Where an animal which has only recently entered the herd is sold for reasons which could not have been anticipated at the time of its joining the herd, this should not be regarded as disqualifying it from the herd.)
  • a herd or flock, usually of cattle or sheep and often called a `flying herd’ or a `flying flock’, where animals are continually being purchased into or sold from the herd or flock so that they do not generally remain in the herd or flock for a normal productive life
  • working animals
  • animals kept wholly or mainly for public exhibition or for racing or other competitive purposes
  • most immature animals (see BIM55575).