As the exploitation of land in the UK moves into a new era, the financial, environmental, cultural and sporting value of woodland is constantly being reappraised. Readers will not have forgotten the “which party will promise to plant more trees?” auction from the last election.
Now that at least some of those trees are in the ground (and some of those are still alive), it is helpful that, in December, HMRC reissued their guidance for woodland owners. Originally published in July 2018, the current guidance provides a useful summary of existing rules for Income Tax (IT), Capital Gains Tax (CGT) and Inheritance Tax (IHT) treatment of woodland which farmers, landowners and their advisers will find most helpful. There is, for example, a particularly detailed commentary on what constitutes “ancillary” agricultural occupation.
The guidance looks at various types of woodland (commercial, amenity, short rotation, agroforestry, ancient and of special scientific interest) in the context of each major tax, and also links each type of land to specific guidance elsewhere within the HMRC manuals. For example, it also discusses the options for conditional IHT exemption of “ancient semi-natural woodlands” and confirms that relief may be available for ancient semi-natural woodlands which are, or could be, included on the inventories of Ancient Woodland kept by Natural England and Scottish Natural Heritage under the England Trees Action Plan (ETAP).
The guidance goes on to discuss the treatment of carbon and other ecosystem service units generated from woodland, confirming the circumstances in which APR and BPR is available.
Practitioners are likely to find this document a useful index when advising clients on this area of growing importance. The full document is available here: