Tax break for F&M payment?
Tax break for F&M payment?
STOCK farmers who had animals culled during the foot-and-mouth blitz could be eligible for a tax break on their compensation payments, says a West Country accountancy firm.
"From a tax point of view the cull came at the worst time of year," says Alan Davies of Exeter-based Bishop Fleming. "During spring many pregnant animals were killed before giving birth for the first time which meant they were considered immature.
"Such animals cannot normally be included when making a herd basis election, which means any profits from sales will be considered as income and taxed accordingly."
But once part of the herd, proceeds on sale can be offset against the cost of replacement stock, giving a valuable tax break, adds Mr Davies.
The Inland Revenue has now recognised the mandatory nature of the cull meant many producers were unable to do this and has agreed to issue an extra statutory concession to producers hit by F&M.
"Effectively it is now possible for immature animals to be included where the herd was slaughtered compulsorily and this could result in potentially substantial amounts of tax being saved on the compensation received." *