| T O P I C R E V I E W |
| Misper |
Posted - 28 Jan 2012 : 12:49:42 PM
I would love some advice here!
I would like to know what you need to have horse wise,to qualify as a stud. Do you need to have a stallion on site or is it possible to just have a couple of brood mares?
Thank you.
Andrea |
| 25 L A T E S T R E P L I E S (Newest First) |
| vjc |
Posted - 04 Feb 2012 : 6:26:09 PM
Only just read this thread, I have been breeding horses at Elmdale stud since 1983 and have never stood a stallion!!! I have instead had the choice of some wonderful hubby`s for my girls and would like to consider myself having been fairly succesfull in my choices. I have nothing against the Boys just find it easier that way. I have bred 24 horses over the years and always called myself a Stud, all be it a small one!. |
| Misper |
Posted - 04 Feb 2012 : 3:29:39 PM
Thank you Rhoni - very interesting and useful reading.
Andrea |
| Cinnypony |
Posted - 03 Feb 2012 : 10:18:35 PM
Spot on Rhoni - with the tax man it is the commecial intent - for a stud they recognise that it takes longer than farming "to build up your bloodline for future breeding purposes"*, so hence HMRC say you have to make a profit every 11 years, as opposed to every 6 years for farms.
If you don't manage to show this commercial intent, you will be considered a hobby stud owner, and therefore not be able to relieve tax losses.
* Landed Estates Annual Review 2012 |
| rhoni |
Posted - 03 Feb 2012 : 11:13:43 AM
This link:
http://www.britishhorseracing.com/owning_breeding/ownership/Bloodstock_Taxation_Guide.pdf
covers it, I think. It was written for the racing industry but the tax regulations apply to all (commerical or intended as such) stud farms.
One could consider any hobby stud as a stud farm as it's a pretty loose label (any number of brood mares, standing a stallion etc)but it is commercial intent that makes the difference to the taxman ie you're doing it to create an income/profit.
The phrase "stud farm" gave rise to the Americanism of referring to a stallion as a stud, not the other way round. The Americanism is a very recent expression, probably a reduction of the phrase "standing a stallion at stud"
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| basbob |
Posted - 03 Feb 2012 : 09:10:59 AM
Only my opinion - but I would agree with Ennik as the term stud is american for stallion. |
| Vygoda |
Posted - 02 Feb 2012 : 06:38:14 AM
Andrea,
I just copied out the FT article so not my words!! But yes, knowledge is power  . The best of luck with it all and please update us with any more information you find out.
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| Misper |
Posted - 01 Feb 2012 : 11:22:43 AM
Thank you Vygoda,for such an explanation and thorough reply. Your points will be looked into carefully.We certainly qualify in terms of ratio/type of house to land and I also breed Shetland sheep. I wondered whether it might be possible to increase the % of that qualification by setting up a breeding programme from my pure bred and PBA mares,but I cannot have a stallion on site.I will talk to the taxman and seek advice re.our possibilities/limitations,from the NFU.
All interesting to gain more knowledge,even if it all comes to nothing!
Andrea |
| Vygoda |
Posted - 31 Jan 2012 : 07:06:59 AM
For those who haven't read the FT, this is the text:
I’m thinking of buying a country estate for my family. I recently read in the FT’s House and Home supplement that rural estate prices are rising, so I want to buy one before prices rise any more. The land is currently agricultural, but my wife is thinking of keeping horses, and we may also consider using it in other ways. What are the main tax factors we need to bear in mind? We have two children in their teens.
Charles Hutton and Thomas Moran, partners in law firm Speechly Bircham, say there are important tax issues to consider when purchasing a country estate.
In most cases, once you have owned it for two years, farmland should qualify for agricultural property relief (APR) from inheritance tax (IHT).
However, the land must be used for agricultural purposes. This would include arable land or grazing cattle or sheep, but it would not include land for horses – unless it was a stud farm.
Therefore, while the land might currently qualify for 100 per cent relief – subject to the two-year ownership condition – this would be lost if your wife kept horses. It is also important to note that the exemption only extends to the agricultural value of the land.
In other words, if any of the land has development potential, that additional value would not be covered by APR.
Buildings used for agricultural purposes may qualify, though. In addition to structures such as barns and machinery sheds, these can include cottages occupied by farmworkers and also the farmhouse itself. There has been a series of cases over what constitutes a “farmhouse” for these purposes. The farm must be run from the building and it must be of a character appropriate to the property, so a large mansion house with a relatively small amount of farmland attached is unlikely to qualify.
In addition to APR, farmland can qualify for Business Property Relief (BPR). Here, the land and potentially other buildings must be shown to be part of a business. This will not be available if you simply let the land, but it may be available if you run the farming business yourself (or through employees) and do so with a view to making a profit. One advantage of BPR is that it potentially exempts the development value, as well as the pure agricultural value, from IHT. Again, there is a qualification period of two years.
Often, an estate will include cottages or houses that are let out. Such properties would not qualify for APR and are unlikely to qualify for BPR.
Where reliefs are available, it is often possible to double the amount of the IHT saving, in effect protecting all or some of your non-farm/business assets from IHT. This can be achieved by married couples having correctly structured wills.
On other issues, you need to consider whether the property you are thinking of buying is suitable for the purposes you wish to use it for.
Planning permission may be required for any change to the property – for example, building stables or demolishing any existing structure. Permission may also be required if the use of any part of the land is to change.
If any non-farming business is to be conducted on the property, this would potentially trigger planning, tax (including VAT), employment and insurance issues – as well as consideration of the impact on subsidies. You would need to take specific advice.
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| Misper |
Posted - 30 Jan 2012 : 10:13:39 AM
I've been selectively reading your posts to my husband in an attempt to keep his new found enthusiasm burning,but Jane,repressing my chuckles,I somehow left "....and throwing endless amounts of cash into a rapidly growing money pit" out! -
Going to the NFU and even the taxman are very good ideas - thank you. My dream has quite disappeared into thin air yet! If I find anything interesting,I'll post.
Andrea |
| zaminda1 |
Posted - 30 Jan 2012 : 02:12:19 AM
The tax man is actually quite helpful if you talk to him, if you get there definition and work to that, then you cant go far wrong.
Sally |
| amy_southworth |
Posted - 29 Jan 2012 : 6:23:38 PM
Originally posted by ZenithaI think the definition of a stud goes something like this - 'the activity of breeding horses while striving to achieve personal goals, whilst simultaneously wearing yourself to the bone and throwing endless amounts of cash into a rapidly growing money pit ' 
Very well said Jane!! lol
I believe that is a spot on definition, direct from the Oxford English dictionary.... 
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| Misper |
Posted - 29 Jan 2012 : 5:59:00 PM
Thank you! This is all very helpful and interesting.
Andrea |
| Cinnypony |
Posted - 29 Jan 2012 : 4:22:03 PM
To get tax relief on any losses from HMRC you would need to be running the stud with a view to bing commercial ie to make a profit, so you would have to be able to have at least 1 profitable year every 11 years. |
| Zenitha |
Posted - 29 Jan 2012 : 1:08:56 PM
I think the definition of a stud goes something like this - 'the activity of breeding horses while striving to achieve personal goals, whilst simultaneously wearing yourself to the bone and throwing endless amounts of cash into a rapidly growing money pit '
Seriously, I don't think you need an on site stallion to call yourself a stud - many people like the freedom to take their pick of outside stallions, I think the key thing is the intention to breed on a regular basis.
I am sure in order to satisfy the tax man for a reduction in Inheritance tax you would have to provide evidence that you have been acting as a stud for x number of years, or provide a feasible business plan for the development of a stud ? |
| Callisto |
Posted - 29 Jan 2012 : 12:53:10 PM
I recently got a flyer from the NFU (insurance arm) about investing, inheritence etc. (and ways of paying less duty), they would probably be up to date on exactly what the rules are. |
| Misper |
Posted - 29 Jan 2012 : 10:32:05 AM
Yes, the FT is the Financial Times. I then looked on the H.M. taxes website and stud farms is listed as possible 50% to 100% relief from inheritance tax but I have been unable to find out the definition of a stud farm for their purposes. I am sure that this is all pie in the sky for us but am curious to know,nevertheless. Thank you all for your advice and comments.
Andrea |
| Judith S |
Posted - 29 Jan 2012 : 09:21:07 AM
I think you would need to take some professional advice before assuming that calling yourself a stud would absolve your estate of inheritance tax. There may be a case for apportionment of part of the land/buildings, but the IR are pretty hot at sniffing out potential tax evasion and the onus is usually on the individual to substantiate any claim with accounts and trading evidence. Using a stable and a couple of paddocks attached to your main dwelling as a 'stud' would be unlikely to bring your dwelling outside of inheritance tax. However if you were running a stud as a main business and using your property as office accommodation etc there may be a case for an apportionment. I don't honestly think the IR would be interested in classifying a couple of mares and a stallion as a 'stud farm'. |
| Vygoda |
Posted - 29 Jan 2012 : 08:41:33 AM
Is FT the Financial Times? |
| Ennik |
Posted - 29 Jan 2012 : 07:26:15 AM
Since a stalliion is commonly known as a 'stud' I seem to think the term 'stud farm' is associated with having a stallion/stallions and being a breeding establishment ..... only my opinion of course! |
| guisburn |
Posted - 28 Jan 2012 : 8:28:56 PM
Think the thing is to talk carefully to your accountant as horses are not classed as 'agricultural' - not sure about stud farms being exempt from inheritance tax.... farms certainly have some exceptions, but horses as 'non-agriculture' and be subject to other taxes like VAT and attract business rates for arenas and buildings, stabling etc used on a square meterage
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| Misper |
Posted - 28 Jan 2012 : 7:27:11 PM
There was an interesting article in the FT today,an answer to a query of someone wanting to buy a country estate and asking for advice about inheritance tax.If you farm sheep etc. the property can become exempt from the tax,but not so if you keep horses,as it is classified as a recreational pursuit.However,if you have a stud farm,the exemption stands. I have an FEI level endurance Arabian and have just bought his 5 year old sister for the bloodlines and because I love my gelding so much and would like to have his genes with me for a very long time!
I am very interested in bloodlines and breeding but up until today have had a distinct lack of enthusiasm from my husband,but,today's article has changed that,hence my question!
Andrea
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| Pashon2001 |
Posted - 28 Jan 2012 : 6:47:06 PM
I don't think there is a definate answer to what constitutes a stud. But I would say 3 or more broodmares and/or stallions on site. I do know of studs that have no permanent mares but several stallions used to outside or visiting mares. I have a lot of mares and two resident stallions, so that is definately a stud! |
| Tomos |
Posted - 28 Jan 2012 : 6:43:14 PM
I pretty sure that anyone can call themselves a Stud, irrelevant of the number or gender of horses they have. However if you do call yourself a stud and you're either standing a stallion at public stud or selling youngstock or both you should be keeping accounts and declaring your income.
I think your point is Rosie, if I'm correct that given the huge increases in everything but the price of horses you're unlikely to make a profit !
Mandy
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| Judith S |
Posted - 28 Jan 2012 : 6:07:06 PM
Why would the tax man suddenly start giving you money? |
| rosie |
Posted - 28 Jan 2012 : 5:30:20 PM
Interesting to see if more people reply - if it was classed as a business then would make a nice change of the tax man giving money to me instead me to him!!!
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