Frequently Asked Questions about Forestry and Woodland Investment

Woodland ownership offers several tax efficient benefits, including:-

Business Property Relief from Inheritance Tax (IHT):

Commercially managed woodland can qualify for up to 100% Business Property Relief (BPR) from inheritance tax, provided it has been owned and occupied for at least two years prior to death. Where this applies, no inheritance tax is payable on the full value of the woodland - both the land and the trees - if it is held at death. Any Capital Gains Tax (CGT) liability that has been deferred or rolled over will also be extinguished.

From 6 April 2026, 100% BPR will be limited to the first £1 million of woodland value, with relief reducing to 50% on any value above this threshold.

Capital Gains Tax (CGT):

The value of standing timber is currently exempt from Capital Gains Tax (CGT). However, any increase in the value of the underlying land between the date of acquisition and the eventual sale will be subject to CGT, without indexation, at the current rate. Up-to-date CGT rates are available on the HMRC website.

To qualify for this exemption, it must be demonstrated that the property has been managed as a commercial investment. It should also be noted that land value is not a fixed proportion of the overall property value and can vary depending on the woodland. We strongly recommend seeking professional advice on land values and the resulting capital gain prior to the sale of a forestry property. Tustins would be pleased to assist in this regard.

Business Asset Roll Over Relief:

Business Asset Rollover Relief allows Capital Gains Tax (CGT) to be deferred on the disposal of qualifying business assets, provided the sale proceeds are reinvested into new qualifying assets, such as forestry land.

Tax Free Income:

Income derived from the sale of timber from commercially managed woodlands is exempt from both income tax and corporation tax. However, tax relief is not available on development costs or interest payments.

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

England and Northern Ireland

In England and Northern Ireland, woodland purchases are subject to Stamp Duty Land Tax (SDLT) under the non-residential or mixed-use rules. SDLT is charged on a progressive basis, with different rates applying to portions of the purchase price within each band.

The current non-residential SDLT rates are:

• Up to and including £150,000 – 0%
• £150,001 to £250,000 – 2%
• £250,001 and above – 5%

For more information go to: HMRC

Scotland

In Scotland, woodland purchases are subject to Land and Buildings Transaction Tax (LBTT), which is also charged on a progressive basis.

The current non-residential LBTT rates are:

• Up to and including £150,000 – 0%
• £150,001 to £250,000 – 1%
• £250,001 and above – 5%

For more information or to use the Scottish Government LBTT Tax Calculator go to: LBTT Tax Calculator

Wales

In Wales, Land Transaction Tax (LTT) applies to all land transactions and is similarly charged on a progressive basis.

The current non-residential LTT rates are:

• Up to and including £225,000 – 0%
• £225,001 to £250,000 – 1%
• £250,001 to £1,000,000 – 5%
• £1,000,001 and above – 6%

For more information go to the Welsh Revenue Authority

This is a common issue for many purchasers. Tustins strongly recommends that both purchasers and vendors engage a solicitor who is experienced in dealing with land and woodland sales. Please contact our office for further advice and professional recommendations.

Woodland owners may fell up to 5 cubic metres of timber per calendar quarter without a felling licence, provided that no more than 2 cubic metres is sold. For any felling exceeding 5 cubic metres, a licence is required for trees with a diameter greater than 8cm measured at 1.3m above ground level. No licence is required for trees with a diameter of 8cm or less.

To obtain a felling licence, please visit the relevant website of Forestry England, National Resources Wales or Forestry and Land Scotland.

As with all land it is advisable that adequate public liability insurance is taken out on any woodland or land owned by you. Woodland owners can also benefit from forestry specific insurance to cover woodland risks such as wind and fire damage. We are happy to provide more detailed advice on request.

Where Tustins is the selling agent for a property, we cannot provide purchasers with advice to help them make up their minds on forestry or woodland matters. However, we are happy to discuss general forestry and UK market matters on an informal basis.

When Tustins are not acting as selling agents, we are pleased to provide full acquisition advice and guidance. 

Our woodland property advisors are always available to speak in person or over the phone.

Forestry has long offered a range of non-cash benefits, and in today’s climate-conscious world, woodland ownership can play an increasingly important role in addressing environmental challenges. Key areas of interest include carbon offsetting, flood alleviation and public access, all of which can also offer financial opportunities for woodland owners.

Carbon Offsetting

Carbon offsetting is currently a major focus for many leading companies, including those in the FTSE. The carbon sequestration potential of new woodlands can be traded, and Tustins has experience in transactions where forestry assets were sold separately from their carbon rights. As a result, carbon rights are increasingly recognised as a potential revenue stream for new woodland and forestry investments.

Flood Alleviation

It is no secret that in dense woodland rainfall takes noticeably longer to reach the ground, naturally slowing water runoff. As such, many experts suggest that expanding woodland cover could reduce the impact of floods, a view increasingly supported by UK government agencies and media. Accordingly enhanced grant aid for strategic afforestation in upland areas is expected to become more widely available.

Public Access

While public access to woodlands can be a sensitive topic for some woodland owners, it also offers potential income opportunities if handled correctly. Woodland owners who manage access thoughtfully can benefit from both community support and financial returns by providing facilities that support recreational use of the countryside, generating revenue through associated businesses all whilst promoting health and wellbeing benefits.

It is not uncommon for woodland to be sold with sporting rights reserved out of the title, some of which may date back decades. Reservation of sporting rights occurs when a landowner sells part of their land but retains the right to enter the property to exercise those rights. Those rights remain with the original owner and their descendants, regardless of how many times the woodland changes hands, unless they are sold on.

Sporting rights typically cover pheasant and snipe shooting, with the pheasant season running from 1st October to 1st February. Woodland owners are generally permitted to manage pests such as deer, pigeons, and squirrels, and this can be carried out at any time of the year.