How does Inheritance tax and capital gains work with woodlands?
by Richard and Angus, 13 March, 2015, 3 comments
Woodlands get some protection from these "capital taxes" in order to encourage people to invest in forestry and to manage it commercially. This blog explains in outline how these taxes affect woodlands. Of course, income from sale of timber is completely tax free whether the woodland is owned by individuals or held in a limited company, but relief from IHT (Inheritance Tax) and CGT (Capital Gains Tax) is not automatic.
IHT is potentially charged at 40% on the woodland of a deceased owner, though that only applies if the deceased person had assets of more than £325,000. There is also no IHT charged where assets are transferred to a spouse. This 40% tax is on the market value of the woodland so one can see that without various exemptions it would be hard to keep woodland in the family and hard to keep rural estates together. Fortunately for woodland owners IHT can be legitimately avoided, reduced or deferred in three different ways.
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