Attractive grants are available for investment in commercial woodland, but we take a look at the tax implications:

 Capital Gains Tax (CGT)

  • Increases in value of timber are exempt from CGT.  But, any increase in the value of the land is not exempt.
  • Rollover relief for the land value is possible.

 Income Tax and VAT

  • Income from woodland is usually tax free.
  • Forestry grants are not taxable unless they are made in compensation for agricultural income foregone.
  • No tax relief is available for any forestry expenditure or finance costs such as loan interest.
  • Capital Allowances are not generally available on plant.
  • You can register for VAT to reclaim VAT on expenditure.

 Inheritance Tax – Business Property Relief (BPR)

  • Commercial woodlands qualify for 100% BPR provided they have been owned for at least 2 years.

Please note this is a very brief overview and professional advice should be taken before making investment decisions.