Woodlands & Taxation
Woods 4 Sale Ltd are not investment or taxation advisors and you should check with a suitable specialist (e.g. accountant, investment advisor) over your individual circumstances and requirements.
Inheritance Tax (IHT)
Forestry qualifies for 100% relief from IHT once you have owned it for more than 2 years. This includes the value of the land and the trees.
The major significance of this is that there is no need to make a lifetime gift of the woodland.
Also, upon death all Capital Gains Tax liability held or rolled over is extinguished.
Capital Gains Tax (CGT)
Timber sales and increases in the value of growing timber are completely free of CGT. However, the increase in the value of the land is liable to CGT.
A great advantage of woodland purchases is the opportunity to “roll over” any CGT liability that you may have generated from the sale of a qualifying business asset, over a 4 year window, against the land value. This means that the tax you would have paid can be used to purchase a woodland and will not become liable for payment until the woodland is sold.
- Legislation introduced in the spring budget of 2008 means that there is a new single rate of charge to CGT at 18%.
- This rate will apply to individuals, trustees and personal representatives and to all assets, both business and non-business assets.
- The Annual Exemption Amount will remain; in 2007/08 the amount for individuals is £9,200.
- Indexation allowance and taper relief is now completely withdrawn.
- The new legislation will have effect for disposals made on or after 6 April 2008.
Income Tax (IT)
All incomes generated from commercially managed woodland are completely free of income tax and corporation tax.
No income tax is liable from sales of timber or the timber element when you sell an entire woodland.