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“Import / Export of teak averaged 9.7% growth over 17 years”
- UNITED NATIONS |
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“Wood outperforms
conventional markets like bonds, gold, real estate, stocks and indices. This has been the best
investment I’ve ever made”
Peter Chadwick, Sales Manager, London UK.
“World consumption of industrial wood is predicted to rise 60% over the next 5 years.
Global Green Services has provided me with a solid, quality investment”
Louise Elkins, Business Owner, Manchester, UK.
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Income Tax, Inheritance Tax and Capital Gains Free Forestry Investment
Inheritance tax free forestry investment opportunities * avoid paying IHT * buying woodland is a very tax efficient investment.
Income Tax
Difficult to believe, but income generated from the ownership of commercial woodlands is completely exempt from both income tax and corporation tax.
No tax therefore is payable on income from felling timber, nor, importantly also, is income tax charged on the profits on selling woodland itself.
Some investors will want to purchase for the longer term and to realize tax free income at times and in amounts to be chosen by them as circumstances prescribe.
If you have more than enough tax income to meet your normal needs, you can gift the surplus income (which is tax free to you) or any part of it to a dependent friend or relative, without you or them having to abide by the paltry limit on lifetime transfers of just £3,000 a year.
Capital Gains Tax (CGT)
There is good news too for woodland investors on the capital gains tax front. Gains in the value of timber are completely exempt from CGT.
Only real increases in the value of the land, after allowing for inflation and the cost of any capital improvements, will be liable to CGT.
If the woodland is held until death as part of a plan to save on Inheritance Tax, then any potential CGT liability will be extinguished on death.
In addition woodlands are qualifying assets for CGT roll-over relief. This means that any CGT liability on sale of a business asset can be deferred by investing in forestry assets, and deferred permanently if the forest investment is held until death.
If you gift woodland assets during your lifetime, it is possible for the beneficiary to qualify for hold-over relief from any CGT on the land element of the gift. The timber value part of the gift is exempt from CGT anyway.
Inheritance Tax (IHT)
Then also provided the beneficiary survives for at least seven years from the date of your gift, there will be no inheritance tax liability on your estate. However there is little point in making the gift if you do not expect to survive for seven years, because you can pass the woodlands free of IHT to the beneficiary by your will provided you survive for two years.
By a valuable concession your estate would have to pay the IHT if you die within two years of purchasing the woodlands, but it will be offered ten years to pay the tax interest free.
Summary of main benefits from investing in forestry
Ability to generate income when needed. Income currently running at 14% p.a. on investment.
You will have an asset backed investment whose value rises by an average of 14% p.a. as timber increases in value each year as it matures.
Substantial tax benefits, including:
- Roll-over relief from CGT on sale of any business asset.
- Tax free income from sales of felled timber or on the timber value if you sell the forest itself.
- CGT only payable on increases in real value of the land if the forest is sold during your lifetime.
- Usual extinguishment of CGT liability on death.
- 100% relief from IHT on the value of the forest provided you have owned it for two years before death.
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