Estates are less likely to create new woodland due to inheritance tax changes, survey finds
The Government’s changes to inheritance tax relief for countryside businesses have proved hugely controversial.
The Government’s controversial inheritance tax changes will lead to landowners planting fewer trees and undermining its woodland creation ambitions, a new survey has found.
In her first budget in 2024, Rachel Reeves announced she was reforming agricultural (APR) and business property relief (BPR), the inheritance tax relief given to countryside businesses, such as farms, to allow them to be passed down the generations.
After protests, the Chancellor eventually agreed a discounted rate on businesses valued over £2.5m, a hugely contentious move with farmers.
Now a survey of more than 200 woodland owners, estates managers and agents, run by the Country Land and Business Association (CLA), Confederation of Forest Industries (Confor) and the Royal Forestry Society, has found that nearly 60 per cent of respondents are now less likely to create new woodland.
They are considering earlier timber harvesting, selling woodland, altering succession arrangements or reducing future investment, according to the survey.
This goes directly against Government policy, which has already pledged to start planting three new national forests.
CLA president Gavin Lane said: “A drop in tree planting, earlier felling, land sales – these are the warnings from the UK’s forestry sector, as woodlands risk becoming unintended casualties of the government’s inheritance tax changes.
“We know these reforms are hurting family-owned businesses across the UK, but their impact on forestry has received far less attention.
“The government has legally binding environmental targets and ambitions to accelerate tree planting.
“This evidence suggests those goals are now in danger, undermining the sector and the investment made to date.”
A government spokesperson said: “We are backing farmers and forestry with £1bn towards tree planting and woodland continue to receive favourable income tax, corporation tax, and capital gains tax treatment.
“Woodlands relief from inheritance tax remains unchanged.
“We listened and raised the inheritance tax relief threshold for agricultural and business assets to £2.5m to protect more small family businesses and farms, while ensuring the largest make a fair contribution so we can deliver support for families and businesses, including cutting the cost of living.”