Do registered dog breeders pay tax? A Complete Guide

Clubs Offering:

So, you have a new puppy and are intending to show it to its championship and then establish a breeding program with that new star! Great idea, but you need to know a lot of tax facts before you decide that you are in the business of breeding future champions.

Who is a Hobby Dog Breeder?

A hobby business is something that is done for enjoyment and pleasure, like playing golf. For that reason, it doesn’t attract tax and HMRC don’t need to know about it (you can read about the Hobby Business Tax Rules in this guide).

In some circumstances, a hobby can become a business or for others, as much as they enjoy what they do, can still be considered a business.

When it comes to deciding whether you have a business or a hobby, you need to refer to HMRC for guidance because they won’t just take your word for it. In fact, back in May 2019, there was a high clamp down on illegal dog breeders in the UK. This resulted in more than £5m in tax being recovered.

HMRC sets out a series of 9 questions known as the badges of trade which need to be answered when deciding whether someone has a business or hobby. These include investigating whether the person:

  • Is seeking to make a profit;
  • Make repeated sales;
  • Has similar businesses.
  • Not all the badges need applying to conclude that a person is in business and should pay tax. And the badges are always used to find a conclusive answer by HMRC. For example, they can decide to ignore their findings here and look at other evidence. However, it is a good place to start if you are trying to decide on your tax status as a dog breeder.

    Do you need to declare income from selling puppies?

    Yes. While there are some exceptions based on country when it comes to ‘hobby breeding’, in most cases you will need to declare any puppies that you sell and pay the appropriate taxes on them.

    If you are talking about 1 or 2 litters a year, then you might be able to exempt paying taxes in that they might fall under ‘hobby breeding’ – but more often than not, if you sell your pups, you must pay taxes.

    Dog Breeding and Taxes from a CPA, just a quick note