UK Forest Website Helps Investors Seeking Tax Benefits

Lisa Ugur, Tax-news.com, London

25 May 2000

The investment opportunities to be had from forest ownership are well documented, but when it comes to hunting down a suitable forest or area of woodland, potential investors are often unsure where to look. Help is now at hand with the arrival of Woodlandfinders.com, an online marketplace dedicated to the buying and selling of forests and woodlands in the UK.

Established by Tilhill Economic Forestry in Stirling, Scotland, the website carries a list of forests for sale, which may be browsed by potential buyers, who may also specify details of the type of woodland they require, to be notified by e-mail when a suitable area of land is added to the site. The whole process has been likened to buying a house, except that one's very own piece of woodland can be snapped from as little as £10,000 - an unlikely scenario in today's spiralling housing market.

Forestry's advantageous tax status is well known. Timber income from the ownership of commercial woodland is exempt from Income Tax. Forestry grants are not taxable. The increase in the value of timber through the physical growth of trees and timber price rises is exempt from Capital Gains Tax and the whole forest value can be exempt from Inheritance Tax after two years' ownership. Long term financial planning underpins the freehold timber market.

For those who may not yet be convinced by the ability of trees to reap financial rewards, they do grow predictably in both size and value. Well managed plantations will provide a capital growth investment, and income from timber harvesting. The predictability of growth makes forestry ideal for future income and pension planning. But 'future income' it really is. Woodland is most definitely a long-term investment and some owners may need to wait beween 40 and 100 years before significant financial gains can be had, so it is best to invest early. Forests nearing maturity are available, but inevitably the older the woodland, the higher the price.

However, owning a forest is not all plain-sailing and it is important to choose the right one to begin with. If seeking taxation benefits, it is wise to look into restrictions placed on some woodlands, which include clauses preventing wholesale clearing and replanting which would limit gains from the sale of timber.

With Woodlandfinders.com now up and running for UK forests (with plans to include Scandinavia and other parts of Europe), it may be that people with a few thousand pounds of disposable income will look to putting their cash into a more "alternative" venture, which carries environmental as well as taxation benefits. After all, what other kind of investment offers sporting and hunting rights and more besides?

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