By Robert Harris
MORE farmers can reduce the tax burden of foot-and-mouth compensation payments following a relaxation of the rules by the Inland Revenue.
Farmers whose animals are treated as trading stock – valued individually rather than on the herd basis – could realise unexpectedly high profits if their animals are slaughtered due to the foot-and-mouth outbreak, as payments are treated as income and are subject to tax, says Carlton Collister of accountant Grant Thornton.
To prevent this, the Revenue, through extra statutory concession B11, allows some farmers to remove profits from the period during which the slaughter took place and spread them over the following three years.
This concession has now been extended to other farmers previously denied this tax break – those who, after receiving compensation, have the right to a new herd basis election but choose not to make it.
All foot-and-mouth compensation (compulsory slaughter, firebreak zone and welfare scheme payments) will be eligible for the three-year spread.
“This is good news for many farmers who have lost stock during the foot-and-mouth outbreak,” says Mr Collister.
“Many of them are looking to restock and this will help them do so.”
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