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Woodland Taxation



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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.

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Crows Nest Liskeard Cornwall PL14 5JW
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