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Abolition of milk quota

10 April 2015

It is well known in the agricultural community that milk quotas will be abolished on 1 April 2015, but there could be tax implications for individuals and farming businesses holding quotas.

If the milk quota was acquired on its introduction (and therefore nothing was actually paid for it), there will be no tax. Where the milk quota was acquired in the open market, and an amount paid for it, a capital loss will arise after March 2015. The loss will generally be the amount that was originally paid, as it will be regarded as having a nil value on cessation.

Where the quota is owned by a partnership or sole trader, it should be possible to set off the loss against capital gains of the business and also against capital gains made by individual partners. The capital loss brought forward can be set off against capital gains after the annual exemption (currently £11,000 for individuals and personal representatives) has been utilised.

As always, it is good practice to speak to your professional advisors when thinking about utilising any tax reliefs such as losses against capital gains.

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