Horse Sense (HS): If you sell a thoroughbred, what are you taxed on?

John Fleming (JF): If you sell a thoroughbred and you are trading in bloodstock as a business, you pay tax on the sale proceeds less the cost of purchase and any related costs like keep (if you don’t have your own farm) or feed, veterinary, sales costs and other business overheads.

HS: What are farmers’ rates?

JF: The livestock rate is 4.8% when you buy a horse. As a flat-rate farmer you cannot reclaim this, but you will receive a flat-rate addition of 5.1% when you sell in order to compensate you for the VAT costs incurred. You can also opt to be VAT registered, which leaves you VAT neutral.

HS: Do you see any benefits in

having a sterling bank account?

JF: A sterling account is useful if you want to manage your exchange rate exposure and save on currency conversion costs. It is also useful if you have a lot of sterling payments you need to transact.

HS: What is the tax difference

between owning a thoroughbred as a hobby or business. What qualifies for “hobby”?

JF: Income tax is based on self-assessment, so you are ultimately responsible for any decision you make as a taxpayer on whether you are a hobby farmer or not. You are best advised to seek professional advice as your own personal circumstances are unique to you.

Fleming Accountancy Services specialists in all aspects of bloodstock taxation. Call John on 087 4170111 if you need specialist assistance with your bloodstock activities.