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.