Tax on woodlands

Key points

• There remains a disparity between the price of woodland and agricultural land.
• Will the tax reliefs for woodland overcome the potential commercial devaluation if agricultural land is used for planting.
• Woodlands may be eligible for inheritance tax business property relief.
• Will woodland satisfy the ‘character appropriate’ test or the ‘Balfour matrix’?
• If woodland is ‘ancillary to agricultural land’ it can benefit from agricultural property relief.
• Timber sold from investment woodlands is outside the scope of capital gains tax.

Much has been written about the UK incentives to plant more woodland in the agricultural and national press. Such moves please environmentalists who are concerned about global warming and they enable landowners to take advantage of the increased prices of softwood such as spruce and larch and hardwoods such as oak and beech. However despite the increasing price of woodlands and forests there is still great disparity between the value of woodlands and...