This study quantified interactions between animal welfare and farm profitability in British extensive sheep farming systems. Qualitative welfare assessment methodology was used to assess welfare from the animal's perspective in 20 commercial extensive sheep farms and to estimate labour demand for welfare, based on the assessed welfare scores using data collected from farm inventories. The estimated labour demand was then used as a coefficient in a linear program based model to establish the gross margin maximising farm management strategy for given farm situations, subject to constraints that reflected current resource limitations including labour supply. Regression analysis showed a significant relationship between the qualitative welfare assessment scores and labour supply on the inventoried farms but there was no significant relationship between current gross margin and assessed welfare scores. However, to meet the labour demand of the best welfare score, a reduction in flock size and in the average maximum farm gross margin was often required. These findings supported the hypothesis that trade-offs between animal welfare and farm profitability are necessary in providing maximum animal welfare via on-farm labour and sustainable British extensive sheep farming systems.