Hi i wonder if anybody could advise how many litters you are allowed to have in any one year before you pay taxes to the goverment.x

If you make a profit, even on a single litter, you need to declare it. There's no tax exemption for dog breeding.

It has nothing to do with number of litters. You can have 4 litters in MOST areas per year (depends on individual council) before needing a council license to breed, so hence not many people need that as few breed so much. If you pay tax or not depends on if you make a profit or not, and how much you are allowed to earn before having to pay tax. Most of us (I don't like the term hobby breeders as breeding is not the hobby, being IN dogs is the hobby, with breeding being just a small part of it all) never make a profit as the expenses are so great.

Hi thanks for that info,I know of individuals that have three litters plus a year and make substantial profit and dont declare to the taxman.

I know of individuals that have three litters plus a year and make substantial profit and dont declare to the taxman.

There would those who would say it is your duty to report them.

"Most of us (I don't like the term hobby breeders as breeding is not the hobby, being IN dogs is the hobby, with breeding being just a small part of it all) never make a profit as the expenses are so great"

Totally agree, that has been my experience. However, I do believe that breeders of certain breeds cannot fail to make a profit. If you are charging £2000+ for a puppy, I fail to see how your expenses could ever be so great that you make a loss. Of course it does depend on litter size, but the breed I have in  mind often have 5+ pups in a litter.

> Hi thanks for that info,I know of individuals that have three litters plus a year and make substantial profit and dont declare to the taxman.

To repeat what others have been said - number of litters makes no difference, it is your total taxable income which counts.  For example, if somone works full time and earns even a small salary of say £15000, and has 1 litter of pups which ears a profit of £1000, then that is all taxable income, assuming a basic tax code with about £8000 tax free allowance.  However, if someone has no other income (eg stay at home housewife/househusband with partner working to support them)  then it is possible they could have a number of litters amount to up to £8000 profit and not have any tax liability at all, as this is set against their tax free allowance. 

Having said that, it would be hard to see how anyone  who could be classed as a "hobby" breeder could make that much profit.  Breeding costs a lot, if done correctly, so you have to offset the costs against the income to come out at the profit.  It is the profit which counts for tax, not the income.

It does not matter whether you make a profit or not. If you are breeding dogs you should fill in a SA form. If you make a profit you pay tax on it. If you make a loss the loss can be set off against any other income and the Inland Revenue will give you a reduced tax code. I have a small holding and despite telling the HMRC that it is more of a hobby now they have allowed me to make a loss for 3 years, saying that you never know --you might make a profit!

I over heard a conversation between 2 young newbies in my breed at a show discussing the profit they planned on making by charging £1000 per pup[ the average from a good quality breeder at the time was £650], with no reputation to fall back on I couldn't honestly see how they were going to get sort of money, if they did and had 6 in the litter[upper end of normal] sold 5 then they would definitely make a profit, my litters have been 3/4 and 4 sold for £650 on endorsed registration hasn't made me any profit, by the time you pay vet fees, stud fees and travel costs, then there is the feeding and care etc.

Rhuari is the only one I bought without a PRA status as it hadn't been rolled out for general use when he was born so paid for DNA test for him, was very expensive at the time but has since come down quite a bit.

Whelping equipment is reusable but I upgraded to purpose made whelping box after the first litter and got CCTV to observe Mum/pups if I was elsewhere in the house and bought extra bits as I saw them recommended.

Going to ringcraft/shows to ensure what you plan on breeding from meets the criteria for a breed quality dog.

Then there are hours of research.

Those who are churning out umpteen litters a year will be making a profit or those type of breeders wouldn't do it, majority on here only have the occassional litter so any money got for pups is soon swallowed up.

> It does not matter whether you make a profit or not. If you are breeding dogs you should fill in a SA form. If you make a profit you pay tax on it. If you make a loss the loss can be set off against any other income and the Inland Revenue will give you a reduced tax code. I have a small holding and despite telling the HMRC that it is more of a hobby now they have allowed me to make a loss for 3 years, saying that you never know --you might make a profit!

That's a bit different Louise,  generally speaking they will not allow the expenses from a hobby to be offset against taxable income if that hobby is never going to make money.  Otherwise everyone would be able to offset costs of skiiing, tennis, painting or whatever their hobbies are agaisnt their tax.

In your case they are obviously considering your Small Holding a business even though you class it as a hobby, and are therefore happy to have the losses offset against other income.  With any hobby which makes some money, it is only the profit that counts against tax, not the income, which is what I was trying to make clear to the OP.  IF, as with most of us, breeding makes a loss people can always try to offset the loss against other taxable income, but in most cases I think the Tax people will simply refuse as it is a hobby rather than a business.  It can seem like they have it both ways, but then they make the rules!

I have never bred so have nothing to add, but I'm just curious about all this - do you count the expense of keeping your adult dogs, health tests, campaigning them etc etc as a cost that will eat into any potential profit from breeding a litter, or just the costs relating directly to the litter in question when you say people should never make a profit? 

I hope you don't think I'm be argumentative, I'm just curious as to how people work out what is a taxable profit.  I do realise that the costs of maintaining a line over several generations, campaigning them, caring for them properly etc will far outweigh any income from a litter, I just wonder if the taxman is so longsighted!!!

These are some notes that the Tax Office use: http://webarchive.nationalarchives.gov.uk/20100512173947/http://www.hmrc.gov.uk/bens/ben14.htm

"Breeding economics

The principal factors which determine the possible income generated from any breeding unit are basically similar and can be summarised as follows.

Breeding capability of female
Average size of litter or batch of eggs
Length of gestation
Average maturity rate, which is age at which offspring become independent.
The young, of course, are not sold or ready to leave the breeder as soon as they are born. The breeder has the task of nurturing the young until they are mature. During this delicate period the breeder will incur

cost of feeding, and special dietary requirements
veterinary bills for examinations, treatments, vaccinations and so on
heating and bedding costs
cost of nursing and possible additional staff costs.
Once the litter or fledglings have reached maturity, the breeder may then also incur costs of any pedigree registration and advertising.

This expenditure will be in addition to the normal maintenance and feed expenditure incurred in the breeding establishment, which typically will include most of the following.

Operating expenditure and associated costs
Cost of new stock

Stud fees

Food costs

Heating costs

Maintenance to accommodation

Staff wages

Transportation costs - attending shows and so on.
Miscellaneous small equipment and consumables
Sterilising fluids/disinfectants

Bedding - ordinary and special bedding for welping

Printing stationery and advertising

Miscellaneous equipment such as bowls, brushes, towels, bins, collar, leads, and so on.
Fees and subscriptions
Breeding licence fees
Veterinary fees
Show/exhibition or other competition fees
Journals and other breed circulations
Registration fees - Clubs, Societies or Associations, for example, registration of puppy with the Kennel Club.
In considering the level of bona fide business expenditure relating to the establishment, a common problem revolves around the head count of productive animals. That is, animals which are actively used for breeding or showing, or are in any other way essential to and make an active contribution to the establishment.

A substantial number of breeders, especially in the dog world, become very attached to members of their stock and contrary to good business practise may continue to keep and maintain animals that have become non-productive. They, in essence, revert strictly to the status of `pet' rather than a business asset.

Ascertaining the true position appertaining to business stock or private pet, in the majority of cases will not be clear cut and where relevant will require careful consideration of the facts in each individual case.

Hobby or business

Most people involved with breeding, whether it be dogs, cats, pigeons and so on, take their activities seriously. This is not to say, however, that they also take the commercial side of breeding seriously or are motivated by a prime objective to make profits. As is often the case, the process of selective breeding can be a slow and costly exercise. The breeder will retain young that show promise. These will, in turn, depending on their eventual quality, be bred from, further enhancing the blood line and so the process will continue.

Inevitably, the creation of a blood line will result in a gradual increase in stock of animals and ensuing costs. Depending on the success of the breeder, demand should also increase, for use of stud animals or for young stock, thereby increasing the potential for profit.

It must be said, however, that this is not always a natural progression and even if success is eventually achieved, the time scale can be variable. A breeder may have to support a growing establishment, with no realistic prospect of enjoying an equally good inflow of receipts, for the foreseeable future.

The breeder may, of course, have been content to subsidise his/her interest and enthusiasm, but as costs increase, may be forced to consider one of two options.

To trim down stock of animals, selling off stock to other breeders or as pets
Increasing breeding activities in order to raise the required flow of receipts by selling young into the pet market.
Depending on individual circumstances, such additional breeding purely to increase income may become a permanent feature or be undertaken at different times, either to cover expenditure peaks, fund capital expenditure and so on.

Whether the activities amount to the carrying on of a trade profession or vocation so that the profits are assessable under Cases I or II of Schedule D or is merely a hobby, is a question that can only be determined on consideration of the relevant facts in individual cases. "

So yes I'd certainly say that keeping a bitch to only the end of her breeding life at say 7 will outweigh any excess income over rearing etc costs of her litters. 

Don't forget though that the 'hobbies' you mention are very different and the whole thing would change if someone was eg to make money from their 'hobby' - say someone was to start instructing others in ski-ing... then their expenses would be considered, in much the same way as breeding/showing is seen as a part time business, rather than a 'hobby' which is why the term 'hobby breeder' is a difficult one.  Because there is 'income' and also 'expenditure' breeding dogs may be taxable, but mostly it's too small an issue for the taxman to be concerned with if the breeder is a small scale, reputable one, breeding as part of a bigger dog activity.  Records should be kept, and in some cases tax forms filled in and occasionally they do visit small scale breeders but I hope they visit the commercial breeders & puppy farmers who actually breed dogs for a living far more often!  It's a similar thing if eg you train other people - then your expenses of eg attending agility shows are taken into account because in order to attract 'customers' you need to compete... so with getting a name for your dogs in order to sell pups those who attend shows can offset the cost of those shows, as well as the purchase and lifetime costs of the dogs involved, and also others dogs who may not be part of the breeding 'programme' - eg if I buy a dog and who fails to come up to the standard for breeding but I keep that dog and perhaps compete in agility with it.... the costs of that dog may also be included..... it's amazing what costs are included, just like any 'business' even though most people on here don't think of having pups as a 'business'.

Barbara that was very interesting reading and a very sensible take on the subject.

I must get myself some "staff" as that seems to be the only thing I haven't got covered, don't know what I am going to pay them with though.

One point further down in the ( slightly out of date) link made me smile.

"Making up a champion can cost as much as £1500"
With the cost of entires and fuel these days.... thats about 10 shows :-)

> I must get myself some "staff" as that seems to be the only thing I haven't got covered,

I am sure you as I often have to get freinds or relatives in to puppy sit at times.  If we don't pay them actual cash we do pay them in kind, either reciprocal dog/puppy sitting, or a meal, bottle of wine etc.

Today I had to ask a friend to pop in while we were at the show, and I have done for the same for her as she has gone away for the weekend.

Her two elderly dogs have now been fed, and the back door left open (I can hear them from here and see them if I go upstairs.

I will pop back in again to put them to bed and get them up in the morning, change their water let them in and out over the day and feed them again before they get home tomorrow evening.

I am out for the day Monday so she will see to mine again.

Too true, we help each other out and happy to do so.

but if we didn't we would have to pay for the services we do for each other out of friendship.

>A substantial number of breeders, especially in the dog world, become very attached to members of their stock and contrary to good business practise may continue to keep and maintain animals that have become non-productive

Ah I see!  That would be why I have a dozen "aunties"!  :-)

I never was much of a business woman. My "non-productive stock" remain here :)

Great great grandma Meg is 13 today !

We also have almost 13 year old  grandpop Tag, plus great aunts of 12,11 and 10
plus others close behind. Puppy money is quickly absorbed in vet bills for the golden oldies,food ,treats, petrol for outings not to mention the significant expenses incurred in raising a litter.

Good interesting post Brainless ( as usual )

I saved the link posted by someone from a similar post a couple of years ago.

oh added ( he has his own company and works in finance) it is unlikely that you would be considered as a business unless you were producing more than 4 litters therefore needing a licence therefore could be considered  the definition of a business if the revenue chose. However, although it is down to how much profit if any you make + any other income you may have, in the end it is the revenues decsion.You may need to ask if you want to be absoultly sure and then defend your case as per Brainless post. However including staff could be a big deciding factor no matter how small the profit.

Lots of interesting views here, but 2 things have to be remembered as well 1) Any on Tax Inspector's opinion may not agree with another - just look at the crazy situation at the moment about reclaims of Underpayments due to wrong codes issued by the Revenue because of multiple incomes (pensions etc)  Many cases have been discussed in the Financial Press and on Forums.  Identical situations have bee treated very differently by different Tax Officers.  2)When it comes down to it is the the £££s of profit which interest them, not the number of litters, bitches etc.  This is why it is important to keep records, invoices, receipts etc. so you know exactly your outgoings and your income in.  IF not, then your profit can look a lot bigger than it actually is.  Which kind of brings us back to the original post - it is very hard to know if someone should be paying tax or filling in a tax return without knowing their exact circumstances.

agree Gwen its only the revenue who can make that decision we can only give opinions :)