Section 225ZD | Effect of claim for spreading profits F1
From legislation.gov.uk
15 July 2026
(1)If the farmer makes a claim under section 225ZB in respect of the total compensation profit for a period of account (“period X”), the profits of the trade carried on by the farmer are to be adjusted for income tax purposes as follows—F1F2
Step 1Treat the compensation payable for all of the relevant animals slaughtered in period X as a receipt of that period (regardless of when the compensation is finally determined or paid).
Step 2If the farmer makes a profit in the trade in Year 1, deduct from the profits of Year 1 an amount equal to—
the total compensation profit for period X, or
if the total compensation profit exceeds the profits of Year 1, such portion of the total compensation profit as will reduce the profits to nil.
“Year 1” is—
the tax year which includes the whole or a part of period X, or
if there is more than one, the earliest of those tax years.
Step 3If—deduct from the profits of Year 2 the applicable amount.In a case where the farmer did not make a profit in Year 1, “the applicable amount” is—In a case where a portion only of the total compensation profit for period X is deducted from the profits of Year 1, “the applicable amount” is—No further deduction is to be made in respect of the total compensation profit for period X from the profits of any later tax year which includes a part of that period.
there is more than one tax year which includes the whole or a part of period X,
either—
the farmer did not make a profit in the trade in Year 1, or
by virtue of step 2, a portion only of the total compensation profit for period X is deducted from the profits of Year 1, and
the farmer makes a profit in the trade in the next tax year (“Year 2”),
the total compensation profit for period X, or
if the total compensation profit exceeds the profits of Year 2, such portion of the total compensation profit as will reduce the profits to nil.
an amount equal to the difference between the total compensation profit for period X and the portion so deducted, or
if that amount exceeds the profits of Year 2, such portion of that amount as will reduce the profits to nil.
Step 4Include in the profits of each of the 3 consecutive tax years following Year 1 an amount equal to one third of the total amount deducted by virtue of steps 2 and 3.