Under current UK tax provisions forestry assets attract some important tax concessions that contribute to the appeal of forestry as an asset class. A useful summary guide can be downloaded via the link below. Tax benefits include;
- Income Tax: timber income derived from commercial woodlands is free from Income Tax
- Inheritance Tax: commercial woodlands attract 100% Business Property Relief after two years of ownership and so are eligible for 100% relief from Inheritance Tax
- Capital Gains Tax: the value of the timber crop is not attributable to CGT meaning a liability only arises on the gain derived from the uplift in value of the underlying land
- VAT: registered businesses can generally recover input VAT
Taxation information is subject to periodic review by Government and is general in nature and whilst believed to be correct is for guidance only. Investors should take independent up to date tax advice from a qualified professional advisor.