The following information is for guidance only. Please consult a
professional advisor to assess how the regulations may apply in
your own circumstances.
At the present time the Inland Revenue divides woodlands into
those which are either “Commercial woodlands” or ”Amenity
woodlands”.
Owners of Commercial woodlands are entitled to the following tax
benefits:
Capital Gains Tax
As your timber grows it will increase in value. This increase is
exempt from capital gains tax, but any increase in the value of
the land is not exempt.
Income Tax
Any income or profit generated from your woodland is exempt
from income tax. Forestry grants are not taxable (except for
annual income from the Farm Woodland Premium Scheme).
If you take out a loan in order to purchase woodland, you cannot
claim tax relief on the interest payments.
Inheritance Tax
Commercial Woodlands (including both land and timber) qualify
for 100% Business Property Relief provided they have been owned
for at least 2 years. Both Amenity and Commercial woodland can be
made a lifetime transfer over 7 years.
In general if you wish your wood to be assessed as being
“commercial” you will need to :
- Sell timber,
firewood or woodland products and to keep a woodland profit and
loss account (you do not have to make a profit now, but there
has to be an intention to try and make a profit in the long
term)
- Have a clear set
of management objectives for the woodland which include the
production of timber or timber products, and for the management
plan to be approved by the Forestry Commission (FC grant scheme
approval or felling licence)
- Being VAT
registered may be seen as evidence of owning “commercial
woodland”.
If you are not
actively selling timber (or just using it yourself) your woodlands
will be classified as “amenity woods”, and you will not qualify
from the above tax benefits. This is of little consequence to most
small woodland owners who do not sell timber but do enjoy long
term capital growth and security.
You may be able to qualify for Inheritance Tax exemption if your
woodland is thought to be of outstanding landscape or nature
conservation value. Normally this is only considered for very
large areas of woodland of national importance which are Sites of
Scientific Interest or in National Parks.
With increased interest in woodland recreation and fuelwood
production, the traditional definition of commercial woodland is
changing.
●
A woodland of your own ●
Managing for conservation ●
●
Woodland grants and permissions ●
Woodland taxation ●
● Woodland insurance ●
Buying a wood ●
