DAERA confirmed this morning that the Bovine Genetics Genotyping Scheme opens on 1 September. Livestock farmers who opt in get £13 for every eligible genotype submitted, covering current breeding animals and future replacements, with calves born and registered on NIFAIS during 2027 coming into scope from January. The scheme budget is £16.6 million, and DAERA has been explicit that the figure assumes every eligible animal in Northern Ireland is genotyped. It sits inside the £60 million Bovine Genetics Project, delivered with Sustainable Ruminant Genetics, and you opt in through the BGP user portal on srgni.com.
The breeding case for it has been made well enough elsewhere, and DAERA Minister Andrew Muir has urged every dairy and suckler beef farmer in Northern Ireland to take it up. What nobody is saying out loud is the accounting bit, and it matters more than it sounds: the £13 is a taxable trading receipt. On most farms the tag cost cancels it out and the net effect is nil. On a farm using the cash basis, the cost and the payment can land in different tax years, and the farm pays tax on money it has already spent. Which side of that you end up on is decided by how your accounts are prepared, not by anything you do at the tagging crush.
Why the £13 is taxable at all
HMRC's position on scheme money is set out in its Business Income Manual. BIM40451 says financial assistance in the form of grants is subject to the normal taxation rules, and that grants which meet revenue expenditure are normally trading receipts. The £13 meets the cost of the tag and the genotyping, which is a running cost of the farm rather than the purchase of an asset. So it goes into turnover, it is taxed as farm profit, and it is not a tax-free windfall sitting outside the accounts.
That is not a reason to skip the scheme. The scheme is worth having and the money is real. It is a reason to know when the receipt lands relative to the spend, because the answer changes the cash you need in January.
Worked through on a Co. Tyrone dairy farm
An illustration built from published figures rather than a client file. A dairy farm outside Cookstown milking 140 cows, carrying 55 replacement heifers and 3 stock bulls: 198 breeding animals eligible in the first tranche from 1 September. Say the 2027 calf crop runs to 150 head, all genotyped once calf registration opens in January.
| Animals | Rate | DAERA payment | |
|---|---|---|---|
| Breeding stock, from 1 Sep 2026 | 198 | £13 | £2,574 |
| 2027 calf crop, from 1 Jan 2027 | 150 | £13 | £1,950 |
| Two tranches | 348 | £4,524 |
Northern Ireland farmers pay UK income tax rates — the devolved bands apply in Scotland only, which is one of the few places where being in Northern Ireland makes the sum simpler rather than harder. A partner or sole trader in the basic rate band pays 20% income tax plus Class 4 National Insurance at 6% on profits between £12,570 and £50,270, so 26p in the pound. Above £50,270 it is 40% plus 2%, so 42p. On the £4,524 that is £1,176 of tax at the lower marginal rate and £1,900 at the higher one, if the cost never gets relieved against it.
The bit that decides whether you actually pay that
You buy the tags and pay for them. You submit the genotype. DAERA pays you. DAERA has not published the payment run dates yet, so on a 31 March year end the spend and the receipt could easily sit on opposite sides of the year end. Here is what each basis does with that, on the £2,574 first tranche.
| Year to 31 Mar 2027 | Year to 31 Mar 2028 | Two years | |
|---|---|---|---|
| Cash basis — profit effect | (£2,574) | £2,574 | £0 |
| Cash basis — tax at 26% | £669 saved | £669 due | £0 |
| Accruals basis — profit effect | £0 | £0 | £0 |
| Accruals basis — tax at 26% | £0 | £0 | £0 |
On the accruals basis the entitlement is recognised in the same period as the cost that earned it, the two net off, and nothing happens. On the cash basis the farm takes a deduction in one year and a taxable receipt in the next, and the £669 turns up on a January payment on account for a year in which no genotyping money was spent. Over two years it washes out. Over one January it does not.
The cash basis is now the default for unincorporated businesses, so a good number of farms are on it without ever having chosen it. Getting the basis right is exactly the sort of thing our bookkeeping and farm accounts work is built around, and it is a decision worth taking before the first tags are ordered rather than after.
The second cost of being on the cash basis
HMRC's helpsheet HS224 states plainly that the special rules for farmers — averaging relief, the herd basis, the compulsory slaughter treatment — apply to farmers preparing accounts on the accruals basis, and that you cannot claim averaging if you have used the cash basis. Averaging lets you take the average of two years' profits, or five, so that one strong milk year does not push a whole year's profit into 40% territory. The two-year test is that the difference between the two years' profits is more than 25% of the better year.
Scheme payments on their own will not trigger that. A year in which genotyping money, a good milk price and a machinery sale all land together might, and a farm on the cash basis has no averaging claim available to soften it.
VAT: leave it out of box 6
HMRC's guidance at VATSC06311 draws the line between funding another body's costs, which is not a supply for VAT, and procuring services from them, which is. DAERA is funding your genotyping cost. It is not buying genotypes from you. There is no supply, so the £13 is outside the scope of VAT — it does not go in box 6 as a sale, and there is no output tax on it. The VAT on the tags themselves is input tax in the normal way if you are registered.
Three things to do this week
Opt in from 1 September. Payment only goes to farm businesses that have opted in through the BGP user portal on the Sustainable Ruminant Genetics site — DAERA's own case study from Tobermore walks through what a registered farm can see in there. Eligibility by animal is shown on the portal, so you can size the payment before you commit.
Book the CAFRE training. Full guidance including key dates and eligibility criteria comes through CAFRE from 1 September, online or in person. The payment dates that decide the timing question above will be in it.
Check which basis your accounts are on before the tags are ordered. If you are on the cash basis and the scheme money is going to be material, that is a conversation to have now. It also interacts with Making Tax Digital for Income Tax: sole traders with qualifying income over £30,000 for 2025-26 are in from 6 April 2027, over £20,000 for 2026-27 from 6 April 2028, and HMRC has not yet set the timetable for partnerships — which is how a large share of Northern Ireland farms are structured.
What is still open
Three things are not settled. DAERA has not published the payment run schedule, so the timing question stays theoretical until the CAFRE guidance lands on 1 September. The £16.6 million is stated as the cost of full uptake rather than a competitive pot, and DAERA has not said what happens if demand runs past it. And the partnership date for Making Tax Digital is still unannounced, which leaves most farm partnerships without a start date to plan around. The first of those gets answered next Tuesday. The other two do not have a date.
If you farm in Northern Ireland and you want the scheme money handled properly in the accounts rather than dropped into turnover and forgotten, that is what our Northern Ireland team does from the office in Ballymena.