How boarding profit is taxed, the allowable expenses for a cattery, capital allowances on pens and runs, licensing, VAT and MTD explained for UK cattery owners.
Running a cattery is a genuine business with the cost base of a small farm and the cash-flow rhythm of a holiday let. Your busiest, most profitable weeks are the school holidays and the Christmas period, then bookings thin out, yet the heating still runs, the licence still has to be paid and the runs still need maintaining. On top of that, most cattery owners sink real money into the buildings before they ever take a booking: timber chalets, heated pens, secure runs, a sluice and laundry area. That mix of seasonal income and heavy up-front investment is exactly what makes getting the tax treatment right worth real money.
This guide covers how your boarding profit is taxed, the running costs you can deduct, the often-misunderstood line between the building and the equipment inside it for capital allowances, the licensing and insurance you must hold, and when VAT and Making Tax Digital start to bite.
As a sole trader you pay Income Tax on profit, which is your total boarding and ancillary income minus allowable expenses. For 2025/26 the personal allowance covers the first GBP 12,570, then you pay 20% up to GBP 50,270, 40% to GBP 125,140 and 45% above, with the personal allowance tapering away between GBP 100,000 and GBP 125,140. Class 4 National Insurance is 6% on profit between GBP 12,570 and GBP 50,270 and 2% above, while Class 2 NIC is settled through your Self Assessment return.
Scottish cattery owners pay Scottish Income Tax across six bands (19%, 20%, 21%, 42%, 45% and a 48% top rate) and carry an S-prefixed tax code, while National Insurance stays UK-wide. Welsh owners have a C-coded tax code at rates currently matching the rest of the UK. If you also have a part-time job or a pension and your code looks wrong, run it through the tax code checker so you are not double-counting your allowance.
If a small home cattery is just getting going, the GBP 1,000 trading allowance may apply. Where your gross self-employed income from all sources is GBP 1,000 or less in a tax year, it is tax-free and you do not need to register for Self Assessment. In practice a licensed cattery almost always turns over more than this from its first full season, so most owners are straight into registering and reporting.
Once you are over the threshold you choose each year between deducting the flat GBP 1,000 allowance or your actual allowable expenses, whichever leaves the lower profit. Given the feed, heating, insurance and licence costs a real cattery carries, claiming actual expenses almost always wins, so the trading allowance is really only relevant in a first part-year before the pens are full.
An expense is allowable when it is incurred wholly and exclusively for the business. A cattery has a longer running-cost list than most home-based trades because you are housing, feeding and caring for live animals.
| Expense | What qualifies | Notes |
|---|---|---|
| Animal feed and litter | Cat food, litter, treats and supplements for boarders | Fully deductible consumables |
| Bedding and hygiene | Bedding, blankets, disinfectant, gloves, waste disposal | Includes clinical and animal waste collection |
| Veterinary costs | Vet visits, medication and isolation care for boarders | Owner's own pets are not allowable |
| Licence and registration | Animal boarding establishment licence fee | A statutory cost of trading, fully deductible |
| Insurance | Public liability, care-of-custody, business and buildings cover | Essential and allowable |
| Utilities for the pens | Heating, electricity, lighting and water for the cattery | Apportion if shared with the home |
| Repairs and maintenance | Repairs to runs, chalets, fencing, drainage and the sluice | Repairs are revenue; new structures are capital |
| Cleaning and laundry | Washing machine running costs, detergents, professional cleaning | Laundry of bedding is a daily cost |
| Software and admin | Booking system, diary, card processing fees, website | Deduct the business subscription cost |
| Advertising | Listings, signage, leaflets, social media ads | Allowable promotional spend |
| Vehicle costs | Mileage for cat collection, vet trips and supply runs | Use the 45p/25p flat rate or actual costs |
| Professional fees | Accountancy, bookkeeping and business banking | Fully deductible |
This is the area cattery owners most often get wrong, and it can be worth thousands. The structures, the timber chalets, brick runs and the cattery building itself, are capital. The shell of a building does not usually qualify as plant, though the structures and buildings allowance may give a slow 3% annual write-down on construction costs. The equipment fitted inside and around the pens is a different matter.
When you have a new build or a major refurbishment, ask the builder to break the invoice down so the heating, electrics, fencing and fitted equipment are itemised separately from the bricks-and-mortar structure. That itemisation is what lets you claim the equipment through the Annual Investment Allowance, often in full, rather than losing it inside a single non-qualifying building cost.
Most catteries are run from the owner's own property, so the house, land and vehicles are used partly privately and partly for the business. You can claim a fair business proportion of electricity, heating, water, council tax or business rates, broadband and vehicle running costs, but you must exclude the private element. Where the cattery occupies a defined part of your land with its own heated pens, apportion by floor area and metered or estimated usage and keep a note of how you arrived at the split. Be aware too that using part of your home and grounds for a business can affect Private Residence Relief on a future sale, which feeds into capital gains tax if you ever sell up.
You cannot claim the cost of feeding or treating your own pets, your own family's share of household heating and electricity, everyday clothing, or the capital cost of the building as if it were a running repair. Drawings, the money you take out to live on, are not an expense either; you are taxed on profit whether or not you withdraw it.
Take an owner running a 20-unit cattery from their own smallholding, taking GBP 45,000 in boarding fees across a year with the usual summer and Christmas peaks.
Income: GBP 45,000 (boarding fees plus a little grooming add-on income)
Allowable expenses:
Taxable profit: GBP 45,000 minus GBP 21,500 = GBP 23,500
Income Tax: GBP 23,500 minus GBP 12,570 = GBP 10,930 at 20% = GBP 2,186
Class 4 NIC: GBP 10,930 at 6% = GBP 656
Total tax and NIC: GBP 2,842 for the year. The Annual Investment Allowance on the new equipment knocked GBP 3,500 straight off profit here, which is exactly why splitting capital spend correctly matters. Run your own figures through the sole trader tax calculator to see where you land.
A cattery's tax bill is won or lost on two things: capturing every seasonal pound of boarding income, and splitting your build costs so the heated pens, fencing and machinery get claimed as equipment rather than buried in the building.
Many cattery owners have a second income stream, perhaps a holiday let or a room rented on the same land, or a part-time PAYE job. These are taxed differently and stack on top of your boarding profit. Rental income is reported separately under the rental income rules, and a PAYE job uses your tax code at source. Use the multiple-income tax calculator to see how the combined streams push you through the bands, and remember that for MTD the GBP 50,000, GBP 30,000 and GBP 20,000 thresholds are tested on your combined gross self-employment and property income.
You must register for VAT once your taxable turnover passes GBP 90,000 in any rolling 12-month period. Pet boarding is standard-rated, so once registered you charge 20% VAT on your fees. The catch is that your customers are private pet owners who cannot reclaim that VAT, so registration either eats your margin or forces a price rise that may cost you bookings. A single-site cattery usually stays below the threshold, but if you add grooming, retail, day-care or run multiple sites, watch the rolling 12-month total carefully and take advice before you cross it, because you can be liable from the moment you breach the limit.
Making Tax Digital for Income Tax replaces the annual return with quarterly digital submissions and a year-end finalisation. The thresholds are based on gross income, not profit:
For a cattery this suits the business well once you adapt. Instead of reconstructing a whole season of bookings each January, you record fees, feed bills and heating costs digitally as they happen and send HMRC a summary every quarter. Pairing your booking diary with MTD-compatible software means the seasonal spikes are captured continuously rather than guessed at year-end. Our guide to MTD for sole traders walks through what the quarterly rhythm looks like in practice.
Treating the whole build as a non-deductible structure. Itemise the heated pens, fencing, heating system and machinery so they qualify for the Annual Investment Allowance instead of being lost in the building cost.
Mixing personal and business utilities. If the cattery shares your home supply, apportion heating, electricity and water fairly and keep your working out, rather than claiming the lot or nothing.
Forgetting the licence and insurance are deductible. The animal boarding establishment licence fee and your care-of-custody insurance are ordinary business costs that come straight off profit.
Not setting cash aside in peak season. Christmas and summer fill the pens, but the tax on that profit is not due until later, so ring-fence it rather than spending the busy months' takings.
Ignoring the capital gains angle on your home. Using part of your property and land for the business can reduce Private Residence Relief on a future sale, so factor it in before you sell.
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