FAQ

Woodland ownership offers a number of tax efficient benefits.  These include:

Business Asset Relief from Inheritance Tax (IHT):
Woodland managed commercially qualifies for 100% Business Property Relief (BPR) once held for two years.  If held at death there is no IHT payable on the total land value of the land and trees.  Any Capital Gains Tax (CGT) liability on the asset which has been held over or rolled over will be extinguished.

Capital Gains Tax (CGT):
The value of the growing timber crop is currently exempt from Capital Gains Tax.  However, any increase in the value of the underlying land from the date of acquisition until the sale of the property will be taxed without indexation at the current CGT rate – see the HMRC website for details of current rates.

It is important to demonstrate that the property has been managed as a commercial investment to qualify.  It should also be noted that the land value within a commercial forest can be as low as 10-15% of the forest value, as the majority of the value lies in the growing timber crop of a mature forest, which is exempt.

It is wise to take advice on apportioning the value between the growing crop and the underlying land, as HMRC may request a valuation of the bare land value at the time of sale.  John Clegg & Co are able to advise and assist on such matters.

Capital Gains Roll Over Relief:
There is a clear opportunity for those who have a CGT liability arising from the sale of a business asset. By rolling over into another qualifying asset – timber – CGT liability can be deferred.  By holding the forest until death the estate is assessed for inheritance tax and the CGT liability is extinguished.

Tax Free Income:
Income generated from the sale of timber from the ownership of commercial woodlands is exempt from both income and corporation tax.  No tax relief is available on development costs or interest payments, and no income tax is payable on income generated from a timber crop or on the sale of an entire plantation.

Please note that this information is for general guidance only.  Prospective woodland investors should take more detailed advice from their accountants or professional tax advisers.

England and Northern Ireland
In England and Northern Ireland woodland is sold under exactly the same tax rules as residential property, except that the cut off points vary.

Based on the purchase price/lease premium or transfer value (non-residential or mixed use) the
Stamp Duty Land Tax (SDLT) rates (including first time buyers) are as follows:

Rates take effect from 17th March 2016:

Up to £150,000 – Zero %
£150,001 to £250,000 – 2%
Over £250,000  –  5%

For more information please consult HMRC. HMRC website.

Scotland
In Scotland the Land and Building Transaction Tax (LBTT) is charged as a progressive tax. The percentage rate charged on the actual price of the property is applied to the value that falls into each band and up to that threshold. Woodland and agricultural land is treated as non-residential property and the following rates apply:

Up to £150,000 – Zero %
Over £150,000 to £350,000 – 3%
Over £350,000 – 4.5%

For more information please use the Scottish Government LBTT Tax Calculator.

Wales

In Wales Land Transaction Tax (LTT) is payable on any land transactions in Wales. LTT is operated by the Welsh Revenue Authority.
Rates take effect from 1st April 2018:

Up to £150,000 – Zero %
150,001 to £250,000 – 2%
£250,001 to £1,000,000 – 5%
Over £1,000,000 – 6%

For more information consult the Welsh Revenue Authority.

This is a common question asked by many purchasers.  John Clegg & Co strongly recommend that purchasers and vendors alike engage a specialist solicitor who is experienced in dealing with land and woodland sales.  Please contact our offices for further advice and suggestions on choosing a solicitor.

If John Clegg & Co are acting as selling agents to the property in question, we are unable to provide purchasers with advice on the acquisition of that particular property. However, we are happy to act for investors who wish to acquire forestry properties where we are not acting as sales agents. In addition, we can provide asset management services on the successful acquisiton of that property to investors going forward. We can also assist you by providing advice on general forestry and UK market matters on an informal basis and our woodland property advisors will be only too happy to speak in person or over the telephone. 

The Countryside Rights of Way Act 2000 (CRoW) imposes a requirement for a landowner to allow uninterrupted public access on foot over a site so designated in England and Wales.  This means that a woodland owner must allow the public to walk unhindered through their woodland.  In practice this is not all that onerous as parking does not have to be provided and the area can be closed during periods of harvesting or sporting events, within reason.  Owners will have to ensure that woodlands are properly insured and that tree safety work has been carried out if necessary.  In situations where public footpaths do not cross the land and the land does not adjoin any public roads then it is impossible for the public to access the land without trespassing and so it is unlikely that a woodland will be visited.

In Scotland, the Scottish Outdoor Access Code gives a general “right to roam” over land including woodland. Those taking access should do so responsibly. Effectively all woodland is included in this. Access may be curtailed or restricted if required by management during periods of activity such as felling.

England & Wales

When offering to purchase property in England and Wales it is usual to offer “subject to contract” and the offer is not binding until there has been an exchange of contracts.

Scotland

In Scotland it is usual to submit an offer that includes your terms of the contract.  This is usually adjusted in a series of communications between the solicitors to reach a conclusion of missives.  However, your written offer may be accepted without adjustment.  It is practice in Scotland that solicitors submit offers on behalf of clients.

It is important to appoint a solicitor who can act in the relevant country.

Woodland Heritage runs three day training courses aimed at linking tree growers with wood users to broaden horizons and raise awareness by educating participants from the forest through the workshop and beyond.  For further information follow the link below:

http://www.woodlandheritage.org.uk

In addition, the Small Woodlands Association runs a selection of courses aimed at woodland owners.  Follow the link below:

http://www.greenwoodcentre.org.uk

Due to the transactional nature of the services we provide, just like lawyers, accountants and financial services firms, all estate agents and real estate advisers are required by law to carry out Know Your Customer (KYC) checks. These checks serve to ensure that we comply with our legal obligations and help regulators to ensure that the UK real estate industry is not misused to facilitate money laundering or the financing of criminal activities.

In the majority of cases these checks will simply involve us formally confirming your identity. Whether you are buying or selling a property, we will also require documentation confirming your source of funds or proof of ownership of the property, respectively. If you live abroad or use corporate structures to hold real estate assets, further documentation will be required to identify the individuals who will ultimately benefit from the transaction.

To conduct customer due diligence on behalf of BNP Paribas Real Estate Advisory & Property Management UK Limited (“us” and “our”) in accordance with The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, HMRC’s Estate Agency guidance for Anti-Money Laundering Supervision and our Global and Internal policies.

http://www.smallwoods.org.uk/information/buying-woodland