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HMRC internal manual

Business Income Manual

Farming: herd basis: elections for the herd basis

S124, S878(3) Income Tax (Trading and Other Income) Act 2005, S122, S1315 Corporation Tax Act 2009

An election for the herd basis:

  • must be made in writing
  • must specify the class of herds to which it relates (see BIM55590)
  • must be made within the statutory time limit (see BIM55600 - BIM55605)
  • normally takes effect from when the farmer first starting keeping a production herd of the specified class
  • is irrevocable (see BIM55630).

There is no special form for making a herd basis election, nor is there a requirement that the election be signed by the farmer. Accounts or computations which clearly show that the herd basis is being used for a particular class of animals may be regarded as an election in respect of herds of that class.

The legislation, although expressed in terms of farmers, applies to any person who keeps a production herd for the purposes of a trade even though that trade may not be farming, see BIM55565.