The economic consequences of alpacas

Morgan Jones

Wikimedia Commons

Where were you when you learned that Geronimo the alpaca had been killed? I, like a character in a particularly heavy-handed state of the nation novel, was in a waiting room at King’s College Hospital, having just received my second covid vaccine. While there was not quite open mourning amongst the newly inoculated, it’s safe to say that never before has the British public been so captivated by an alpaca, even if it did have bovine tuberculosis. Geronimo’s ordeal, along with the considerably more unedifying tale of Pen Farthing and his cats and dogs, has seen us spend the dregs of this miserable summer examining our nation’s very odd relationship with animals. Recent polling shows that 40% of people think that animal lives are worth just as much as yours and mine, and a lurking 3% thinks animals are actually more worthy than the rest of us. However, when it comes to alpacas (and other “new world camelids” like llamas, guanacos or vicunas, as refers to them), there is an altogether less fluffy reason to welcome them into your home, heart, and financial planning regimen. Namely, they can do wonders for your tax bill.

Spending time on the UK’s various alpaca keeping websites and forums, “tax reasons” are regularly cited as a key motivation for scattering a few camelids on your land. After the initial purchase price, alpacas are cheap to keep- one site informs us that “vets cost and feeding will come to about £200 annually”, and they are hardy and reasonably long-lived.

Agricultural land – “occupied wholly or mainly for the purposes of husbandry”- is taxed at a different rate to land not used for agricultural purposes, and alpacas, putting aside their inherent nobility and appealing, fibrous coats, are some of the most cost-effective farm animals out there.

As another UK based alpaca-keeping site tells us:

“The purchase price of breeding stock, barns and fencing is depreciable against tax. Owners can breed their alpacas, increase the size and value of the herd and not pay tax until and unless the animals are sold. If the alpacas are actively raised for profit, all related expenses – veterinary care, feed, breeding costs – can be set against income.”

As Keep Alpacas UK informs us, “these kinds of savings can be a major benefit of ownership”.

While all of this is perfectly legal, there has been at least one case of alpaca-related tax fraud in the UK in recent years, with one Yorkshire woman jailed in 2019 for false VAT claims on her alpaca farm.

This is a problem not localised to the UK. In 2017, then-US Senator Jeff Flake (remember him? Briefly meteorically famous amidst the chaos of the Trump presidency, now apparently US ambassador to Turkey?) railed against “outlandish loopholes” in the tax code, including what he referred to as the “alpaca tax fleece”, where people avoided property tax by keeping alpacas; “it’s not like livestock”, the Senator commented, indicating that he viewed the camelids as more akin to “exotic pets”. With this campaign he incurred a backlash from the Alpaca Owners Association, who somewhat unconvincingly retaliated that “we are a livestock industry. Just like the sheep industry, we shear our animals once a year, we turn that into marketable products – clothing and things”.

Helen MacDonald, Geronimo’s owner, insisted that her poor benighted alpaca was simply a beloved pet (a category of whose tax status I am unsure). Nonetheless, the Geromino saga and accompanying marches down Whitehall drew the ire of a disparate coalition of people who saw killing the alpaca as the first step in building more houses, breaking the triple lock, and prizing the cold hand of donkey sanctuary donating middle England boomers from the controls of the British state. There is something almost cartoonishly vindicating about the idea that even Geronimo’s camelid brethren are not unsullied by the hands of capital, and that even a humble field of alpacas has something to say about the ways in which wealth is stored, protected and retained in the UK. Everything is about house prices, apart from alpacas, which are about tax avoidance.