The following Private Client guidance note Produced in partnership with Emma Haley of Boodle Hatfield provides comprehensive and up to date legal information covering:
Woodlands may attract one of three different types of relief from inheritance tax (IHT) depending on the nature of the land and timber operations:
agricultural property relief (APR)
Woodlands may obtain APR if they are occupied with agricultural land or pasture and their occupation is ancillary to that of the agricultural land or pasture, eg a strip of woodland acting as a wind shelter for farmland
business property relief (BPR)
Woodlands may qualify for BPR if they are run as a commercial business (eg orchards or nurseries) or otherwise generate business profits by regularly producing timber
Woodlands may also qualify for woodlands relief and this will generally be considered on a death if neither APR nor BPR is available
APR and BPR are usually to be preferred to woodlands relief. This is because APR and BPR effectively provide the equivalent of an exemption from IHT (at 50% or 100% of the relevant value of the property) whereas woodlands relief only defers IHT. Moreover, woodlands relief only defers the IHT on the timber, not on the underlying land. However, there will be occasions when woodlands are either not associated with agricultural property or are not part of commercial operations (eg where held as part of a private estate or as an investment) and so woodlands relief needs to be considered.
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